The headlines all say that the Bank of England has pumped another £50 billion into the economy in the third round of quantitive easing. In fact, the money will not get far into the economy. It is given to the banks and other financial sector companies, and evidence from the previous £250 billion worth of quantitive easing is that almost all of it will stay there, being very handy stuff with which to fund massive salaries and bonuses.

This whole notion of what is and isn’t useful in the economy is strange anyway. This cold weather is making us all use a lot more gas for heating. Those higher bills will count as increased economic activity and higher GDP, but actually we are all less comfortable. This morning I have put on an electric heater to boost the central heating. That is increasing economic activity and increasing GDP. But for the last week I have been burning logs from my own garden on an open fire – that doesn’t increae GDP as I didn’t pay for them. But they were warmer and more pleasurable. A homely example that the automatic equation of GDP with a better life is nonsense.

There is a mystery about the way Q.E. works. The Bank of England does not just give the cash away to financial institutions, but exchanges it for assets. We are told that this is not the Bank of England saving the bankers from their mistakes by buying up toxic assets, but rather that the assets are gilts.

I do not understand this at all. Why would banks want to cash in gilts? Gilts are already perhaps the most liquid asset you can hold, other than cash, in the classic definition of liquidity that they can be easily sold without much affecting their value. On top of which, these same financial institutions are actually still buying bonds from the Bank of England on a regular basis, which would make the process pointlessly circular. And the current Bank of England bonds the banks are buying pay historically low rates, almost certainly lower than any gilts they are exchanging under Q.E.. Why would they do that?

The only sense I can see is that the Bank of England is giving cash in return for junk, and the gilts line is a cover. Any genuine official statistics on exactly what the Bank of England has bought up under Q.E.anywhere?

It is beyond doubt true that the effect of creation of new money is to reduce the value of currency already in circulation. The effects will show through in inflation and the exchange rate. Of course, those will continue to be affected by other factors as well, which is why there are better and worse times to do it. But in effect Q.E. is still a transfer of wealth from those who hold any of the currency to those given the new stuff. In other words, more cash from you to the bankers.

Actually if QE had been used genuinely to stimulate the economy it would have been a marvellous thing. With £350 billion we could have built an enormous amount of social housing on brownfield sites, converted derelict high streets into housing, built the Severn barrage and a high speed rail link from London to Aberdeen and still have had change. We could have reopened the steel industry to do it. a thousand manufacturing firms could have been re-tooled. Millions could have been employed. The entire logic of economic depression could have been turned around.

Instead we gave more cash to the bankers.

234 Comments

Never expect anything but corruption and crime from the scum in power. If they’re doing anything with the word billion in it they’re trying to enrich their mates at the expense of others. Be grateful we’re only handing over treasure to them. The brownskin people have to pay in blood as well.

When QE first started it also seems to have been significant in fuelling the massive increases in commodity prices a couple of years back. What’s for sure is that precious little of it is filtering into support for small businesses, which constitute the vast majority of employers in the UK.

It’s curious isn’t it, how economists – or it it just the media? – seem to go through such angst about the fashionable ‘index’. I remember decades ago the news was full of worry about the ‘balance of trade'; then it was all those money indicators – M0, M1, M5 and the rest. Then the exchange rate. Now we all get the heebie-jeebies about ‘growth’, which as you point out above, Craig, is full of daftness. You know what? I don’t think they have a systematic theory at all. I don’t think they have a clue.

Thank you for pointing these things out to people. Not many have the time these days to think about what’s really going on, but people need to know. Our future and especially our children’s future is being majorly undermined in England and all over the world.

Using the money to rebuild in this way is exactly what I’ve been advocating for years now, mainly to deaf ears, albeit to people that have absolutlry no control over anything much really. Amongst other thins, I envisaged a massive solar / renewable building programme, generating thouseands of skilled jobs, new technology, with the added benifit of removing the dependancy on the energy firms and subsequently, no gas / elec bills leaving more moiney in peoples pockets to spend, if they so wish wish.

Craig, it’s worth buying this week’s Spectator for the articles on QE by Fraser Nelson (“QE is the transfer of wealth from the poor to the rich. It floods banks with money, which they use to pay bonuses” and Bill Jamieson.

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As a bonus you will also get an excellent review (pp34-5) by Rory Stewart (Con MP for Penrith and Border) of Andrew Alexander’s ” America and the Imperialism of Ignorance: US Foreign Policy since 1945″. “The world is a much more dangerous place as a result of America’s determination to save it.”
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Stewart notes that Alexander “builds his case through quotes from primary sources, from National Security Council documents, speeches, telegrams, presidential letters and Soviet archives. Here is a general, commenting on the Japanese: “When we knew we didn’t need to do it and they knew we didn’t need to do it, we used them as an experiment for two atomic bombs.” ” Comment is superfluous.

I’ve an economics degree, which included econometrics, and looking at my ISLM model, still cant for the life off me figure out how QE or TAFT work, Japan came up with it, having worked on FSA projects (dodged Basel 1 and 2) it appears to me that the only alternative is smoke and mirror approach as Craig concludes, namely a figleaf for trading banks toxic debt,and would explain why UK banks tier 1 capital is looking so healthy but absolutely no mechanism for Keynesian trickle down

There was an announcement this morning that the major banks have failed the coalition targets on lending to small and medium aized enterprises. If you google banks fail lending targets, you see links going back through every month of last year saying the same thing. And then they announce their annual profits in £billions such as Barclays who announced £5.6 billion profits for 2011.
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Project Merlin!
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Project Merlin proves less than magic
Net lending to small businesses is down 6%

You think the bailout form Germany to Greece could be made a little less onerous on the Greeks as part of the deal, if they weren’t (apparently) required to buy numerous planes, tanks and submarines as required in bailout no1?

You think your average German knows they are paying for these via the backdoor?

The same logic is again without doubt true with the third IMF loan to Greece. Germany has ordered Greece to buy military arms such as German tanks and German artillery. Thus the tools of death idle ready in austere compounds while thousands of Greek children bawl “Είμαι πεινούν mummy.”

And meanwhile, having done the approved, virtuous thing, putting a significant portion of my income aside into a pension pot, I find as I reach retirement, that a large part of its value has been stolen by bankers, and the value of the annuity I can expect is negligible because of artificially low interest rates, and the erosion of the value of money through QE. If I had ,my time again, I would have spent it all on travel, alcohol and wild women, and borrowed to the point of bankruptcy, like the bankers did.

There is still a massive private debt mountain out there, that hasn’t been called in yet, but has the makings of crash that will dwarf the banking crash. That is why the government is favouring borrowers over savers with their interest policies. I think it is immoral.

Obviously, the ‘cash’ is in exchange for relatively illiquid assets, or the exchange would indeed be pointless. But I’m not sure illiquidity necessarily means ‘junk’, and in any event the exchange is presumably at post-crash prices.

Craig,
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Your understanding of what is going on, is not wrong. And Henry Ford warns of the consequences …. “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
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And this explains the folly of austerity measures quite well too ……. http://www.assoeconomiepolitique.org/IMG/pdf/Manifesto_of_the_appalled_economists.pdf
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The banks never have a problem foreclosing on those who are negligent and reckless and unable to repay credit created to generate debt and arbitrary profit called interest. Time for the people to foreclose on the system and demand their billions/trillions back? And time for a Par;liament which acts in the interest of the people too, methinks, or they can kiss their Ponzi scam goodbye too.
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There appears to be a bit of bother in Greece at the moment …. because the banking system is holding it to ransom for money which the people allow them to invent and provide for their labour and pleasure.
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And this tale ….. http://nieuws.nl.msn.com/buitenlands-nieuws/griekse-politie-wil-arrestatie-leden-trojka ….. [Yes, I know it is in Dutch but I couldn’t find it English :-)] tells you that Greek police union has told its members to arrest any ECB or IMF or EU inspector who would be in Greece, presuming to tell the Greeks what to do/how they are to live.
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Are you men or mice? Squeak up. I can’t hear you.

Great to see your interest and bafflement at QE. Even the delightful Steph. Flanders on the Beeb is pretty clueless at explaining Money. Yes, the BoE (Bank of England) can, and with QR, DO ‘print’ money. But this, plus the actual printing of banknotes is only 3% of all the money in circulation (M3/M4 in economists’ jargon.)

So where did the other 97% of all our money come from? Why the likes of RBS Lloyds BoS etc can also, in effect, ‘print’ money. Shock Horror when BoE ‘prints’, just doing normal business when profit-making Banks do so. What a scam! How do they get away with it?

To learn more about money (the stuff even commentators seem to have missed) have a look at the Positive-Money website:

QE is QE. Bailouts are bailouts. The Bank of England could do a bailout with QE, but there is no necessary connection between the two. If the BOE is buying gilts it is by definition not doing a bailout, since gilts are as good as cash.

QE is money printing, a very simple operation: the BOE writes a cheque to someone’s account with money it does not have — sometimes called ink money — thus creating money out of thin air.

If the recipient of the cheque is the government, the bank receives a government bond in exchange: an exchange of one worthless piece of paper for another, but with the significant consequence that the government spends the money on another little war, bailing out Greeks, hiring more bureaucrats, funding HS rail or some other boondoggle supposed to be beneficial to the economy.

If the recipient is not the government, then the an asset must be exchanged for the money. If the asset is a government bond, this is an exchange of one worthless piece of paper for another worthless piece for which someone has nevertheless paid real money. In that case the BOE is giving back the money it previously acquired by selling the bond.

The result is an increase in the money in circulation, which means a stimulus to the economy. The transaction also tends to lower interest rates, which stimulates borrowing from the commercial banks, which adds further to the money supply and hence demand.

So, no need for paranoia. The government is doing the right thing. Encouraging private spending, not government waste.

You are normally pretty astute, but seem not to have read what I wrote. You write:
“If the BOE is buying gilts it is by definition not doing a bailout, since gilts are as good as cash.” Which is quite true. But you are ignoring my question – is that really what the BoE is doing, because what possible incentive would the banks have to sell their gilts – which are, as you say, as good as cash – to the BoE for cash? Especially when they are also, with cash, buying new bonds which have a lower rate of interest than the gilts they are supposedly selling?

I’ve always wondered about the utility of GNP as a measure of wealth. I think it is one of these measurements that can be made .A good crime spree would increase economic activity and thus GNP. Someone once coined the term “ilth” as opposed to wealth .

thank you for informing us about your little black market projects
we will submit legislation to tie down the burning of logs so that burning logs will add to GDP
second we have not ever used one dollar pound euro to buy anything
we have only provided loans
its our money, was, is, will be
we do what we want with it
and less you understand about what we do better for us
have a nice day

“normally pretty astute.” That’s very polite of you, Craig, since I was so rude.
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As to your question, “what possible incentive would the banks have to sell their gilts – which are, as you say, as good as cash – to the BoE for cash?” my assumption is that the BOE is buying bonds in the market, i.e., from anyone, which might include you or I, Lloyds Bank or the Bank of China. In that case, the cash exchanged for the gilts may indeed be invested in new bonds, but as you ask, why would it be?
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If I sell a bond I may use the cash for consumption spending, business investment, buying a house, etc., all of which are stimulative. At the same time the number of bonds in circulation has been cut, thus there is a negative impact on interest rates, which is also stimulative. And even if I did buy another bond, that merely passes the cash to someone else who is more or less likely to actually spend it.
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But it is not altogether clear to me what is happening from the single news report I have read, probably because the central bank prefers to obscure from public view exactly what it is doing. However, in this case, unless you are aware of evidence to the contrary, I am inclined to believe that the BOE is engaging in a straight forward effort to stimulate the private sector by increasing the money supply.

At the Leveson inquiry it has been revealed that a photo of Hauge in a gay bar was brought by NOTW for £20k and never published, no doubt Rupert (great friend of Netanyahu) was just happy to have the picture and never once considered using it to ‘influence’ Mr Hague.
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Andy Coulson was Cameron’s press adviser at the time whilst still being paid by the NOTW. That’s what Cameron means by transparent government – transparently corrupt to the core.
_http://www.guardian.co.uk/media/2012/feb/09/news-of-the-world-guido-fawkes-hague?newsfeed=true

“… the major banks have failed the coalition targets on lending to small and medium sized enterprises.”

The problem is that no small or medium sized businesses can come up with business plans to justify loans. The economy is depressed, demand is falling and will continue to do so.

What is remarkable is the hypnotic power the ideologists hold over people whose living standards are falling steadily, whose prospects of every kind constantly grow dimmer but who retain a compulsion to believe that all is well and that prosperity is just around the corner. Because the ruling class loves them all.

Maybe the tipping point will be around 60% Youth Unemployment and mass homelessness and it will then sink in that, actually, it is not the fault of the single mother down the road, the desperate bastard looking for work, now that we’ve bombed him out of Iraq and killed his family for fun or other Malthusian villains.

It is that, if we want a decent society we need to make one, because Santa Capitalism isn’t going to give it to us.

The vast majority of the QE money is spent on buying shares and property. There is only one purpose to it and that is to keep these bubble markets going because they have no other strategy. It is of course just making things a whole lot worse down the line.

“There is only one purpose to it and that is to keep these bubble markets going because they have no other strategy. It is of course just making things a whole lot worse down the line.”
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Hey, DWoTSOT, what’s the alternative? A good old fashioned depression, everyone to go bankrupt and the gold bugs to pick up the pieces for next to nothing? That’s what made Joseph Patrick Kennedy rich during the Great Depression. He shorted the market on the way down, invested his profits in gold then picked up the Chicago Trade Center for pennies on the dollar. With the profits he was able to buy the US Presidency plus the Senate seat for Massachusetts, not that it brought him any joy in old age.
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But I don’t think that will work well now. It will convert mass unemployment into near universal unemployment. During the Great Depression, the Western countries still had some demand for manufactured goods. Now most of that stuff’s imported from low-wage economies, so without the bubble economy, there ain’t nuthin’.
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The solution that seems obvious to me is to get on with the convergence of wages between East and West, without resort to mass immigration to replace the British workforce with third-worlders, Poles, Bulgarians, Slovaks and others who easily outcompete the less competent members of the UK (potential) workforce.
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To do that, only two things are required. First, abolition of the minimum wage, which forces the least competent members of the workforce into idleness. Second, provide a wage subsidy to insure that those taking the lowest market wages, i.e., comparable to wages paid to the industrial workforce in China and Vietnam, etc. do not starve.
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I worked out the cost here. It turns out to be rather trivial, since it is offset by cuts to welfare and related services, e.g., prison incarceration, mental hospitals, etc. which cater particularly to the unemployed. In addition, it creates a whole new range of business ops. for British capitalists, which can help restore the balance of payments and, through increased corporate tax payments, eliminate the government deficit.

“CanSpeccy you are proposing the salvation of Capitalism by the re-institution of slavery.”
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So what are you proposing Chris2? Outright starvation, hyperinflation?
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And what’s slavery got to do with wage subsidies, anyhow? You think unemployment is more dignified? You think being replaced by an African, an Asian or an East European is better than working for a subsidized wage and getting on-the-job experience that will increase the market value of your labor?
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Come on, get your brain in gear and forget the pathetic leftist “share-the-wealth but don’t expect us to do a job” bollocks.
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Incidentally, if you allow the labor market to work, i.e., get rid of minimum wage laws, you not only drive down wages but you drive down costs too. How else do you suppose that Chinese industrial workers survive on a couple of hundred quid a month? It’s because labor being cheap, everything is cheap.

New lamps for old? Is this what QE amounts to?
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But what, I wonder, would the economy have looked like without QE? Proabably a full-on Great Depression 2, with horrendously high unemployment, collapsing demand, diving tax revenues, massive cuts across the board, the £ taking a nosedive…

So, one can aruge that without QE things would have been far, far, worse. We’ve effectively been running on the spot rather than moving forward.

QE isn’t working well enough though, if, it can be said to ‘work.’

QE is designed to give the impression that ‘capitalism’, especially the financial sector, hasn’t actuallly imploded, and the entire system is insolvent, that is the banks, our financial institutions.

Even in the US, a couple of years ago, when the banks were failing and falling, questions began to be raised about the future of capitalism. In Congress representatives from both factions of the ruling party began to publically question whether transfering colossal sums from the taxpayer to the financial sector, the famous bailouts, was ‘capitalism’ or, in fact, ‘socialism.’ For, if private capitalism cannot survive without the protection provided by the State, the State acting as a bank, where did ‘free markets’ go to?

Obviously it was of the utmost importance that this questioning of the central tenets of liberal, capitalist, economic dogma and faith, be stopped. No more discussion. There is no alternative to ultra-liberalism. And poor old Keynes is smeared with the ‘socialist’ label, how that would have amused and appalled him.

QE is creating, not so much, of ‘money’, but rather ‘debt.’ Debt created out of thin air, and money does grow on trees, contrary to what most people think. Which is both ironic, and frightening when one thinks about it.

One can also see QE as a delaying tactic, a frantic and desparate attempt to avert the inevitable, the collapse that’s coming when the markets understand that the debt bubble is bursting and cannot be pumped up again, a bit like Humpty Dumpty.

Finally, QE is almost a strategy for ‘class warfare.’ The ruling, financial elite, essentially loses everything they have on the great, revolving roulette wheel of ‘the markets’, the finantial institutions are insolvent, yet because the ‘elite’ control both the economy and the politicians, they have the power to demand that the State covers their losses and saves them, by ‘emptying’ the treasury. Otherwise known as by far the biggest welfare, or social security check payment in recorded history.

My exact thoughts,Craig. Having spent a couple of days trying to work it out I also reached the conclusion that the gilts story is a cover and that the reality is the purchase of junk securities to keep the banks afloat. The purchase of gilts would only make sense if the market for gilts had dried up- it would be a bailout of the state. We’re not yet at the point although it is to come. This is a bailout of the banks- something they can’t own up to , for obvious reasons. We must try to expose this deception as the consequences will be catastrophic for all of us. I’m trying to raise issue with Occupy Movement

QE is an attempt to sustain a system, financial capitalism, that, arguably, has collapsed. That is the leading banks are all insolvent, if one examined their books properly. Obviously, this conclusion and realization is totally unacceptable for a variety of reasons, both economic and political.
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Whilst Greece, being a very small economy, cannot magically create a new finacial bubble that gives the impression that the system hasn’t collapsed and imploded, the leading economies, like the US and the UK, can, by creating vast amounts of new ‘money’ or really, new ‘debt’, get away with this ‘magic trick’ or Ponzi scheme… at least for a while, until something turns up, before the realization that we are all Greeks, dawns on the public, arguably the banks know already.
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Capitalism is on welfare, and the 1% have lost everything playing ‘roulette’, but because they ‘own’ society, and the political class, they are able to demand that the State covers their loses, in what is probably, no certainly, the biggest social security check in recorded history. How ironic, whilst the Welfare State is being gutted, that same State steps in with a massive hand-out to the 1%!

A true indication of how bad things really are is to imagine what the economy would have looked like without the massive injection of ‘debt’ to save the financial system and the rest of the economy. But how long can this Hindenburg-size bubble keep airborne? One keeps pumping it up, but at the other end it’s full of holes.

Without QE we’d probably be back to the 1930’s with economic collapse, mass-unemployment, and revolution in the air. QE is an attempt to avoid the consequences of an economic experiment, neo-liberalism, that has gone drastically wrong, as I was convinced it would and have been arguing the case for a quarter of a century.

P.S. Of course the implication of rejecting these bailouts is that the banks must be put through bankruptcy- they need to be taken off life-support, they need euthanasia. This is what we should be pushing for. Until this is done we can’t start to rebuild the country.

Nice post craig.
`Oh` If you were at the helm Craig. But maybe Scotland would be more deserving of your talents.

When banks create a loan, they increase the Money Supply. If the government takes out a loan by selling a bond, it can print Federal Reserve Notes. If you take out a loan, the banker adds credit to your bank account. At the end of the year, you owe the banker an interest payment. But, since he only created the principal and not the interest, someone somewhere must take out another loan so we can all make our principal and interest payments. Over time rolling over those interest payments creates a Mountain of Unpayable Debts. This crushes economic activity. It also does do what it was designed to do which is to transfer all real wealth from those who created it to those who gave themselves the right to print our money.

As the Bilderbergers understand the situation of the world economy, there are just two solutions. One is Austerity and the other is Hyperinflation. And we are doing both right now. Austerity transfers wealth from us to the Uber Rich by selling off public assets we paid for and canceling programs we paid for so we can make payments on a fictional debt. When Argentina was forced by the bankers to sell of its state owned oil company, the bankers paid 4 cents on the dollar a national resource. Austerity merely accelerates the transfer of all assets to the Bilderbergers.

I said public debt is fictional because the alternative was that government had created money without debt and interest payments so there never would have been a public debt. If you count the Fannie Mae and other guaranteed debts, the total US government debt is 21 trillion dollars.

Hyperinflation does not cancel public debts by deflating its actual value. Double prices and cut your debt in half does not work in the real world. That is an illusion. The Federal Reserve is creating tens of trillions of dollars and loaning it out at rates ranging from 0.01% to 0.25% interest. John Williams at Shadow Stats tells us the real inflation rate is 11.6%. We can calculate the real cost of borrowing by subtracting 0.25% from 11.6%. The Uber Rich pay minus 11% interest which is sort of like giving trillions of dollars to multi-billionaires. Blythe Masters is the English girl who is Vice-President for Global Commodities at JP Morgan. She is heavily invested in food futures with borrowed money. This along with ethanol subsidies has driven up the cost of eating worldwide so millions more die of starvation every year.. If she makes a mistake betting on the future price of food, copper, oil gold or silver, all Blythe has to do is to sell her losses to Ben Bernanke at the Federal Reserve for 100 cents on the dollar. Then Blythe and her friends at Goldman Sachs can borrow even more money and drive prices even higher. This will soon raise the price of food beyond the reach of WalMart shoppers and is by design. They want the poor to rebel so the middle class and the poor will shoot each other. In America this will be interpreted as a race war which is what it will be. If we are busy killing each other, we will not have time and energy to chase down bankers.

That is how hyperinflation works. I recently said America will go into hyperinflation within 16 months cutting wages in half. I define hyperinflation as beginning at 25% for a reserve currency like the dollar. This intentional inflation is designed to reduce you to Debt Slavery so the Bilderbergers own everything of value in the world including you, your spouse and your children.

Quote from Stormfront.org

Spoken like a true nationalist.

With £350 billion we could have built an enormous amount of social housing on brownfield sites, converted derelict high streets into housing, built the Severn barrage and a high speed rail link from London to Aberdeen and still have had change. We could have reopened the steel industry to do it. a thousand manufacturing firms could have been re-tooled.

Craig,
“is that really what the BoE is doing, because what possible incentive would the banks have to sell their gilts”
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, By definition ; “A gilt is a UK Government liability in sterling, issued by HM Treasury and listed on the London Stock Exchange.”
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Hence the gilts bought are by issue of further gilts, this trade of the kind with kind can only make sense, if the gilts that getting bought are fixed rate gilts, with a lower than inflationary coupon (rate of return) rates. This weird trade is the latest symptom of the crash that has so far destroyed the wealth of the middle class, and the poor, whilst enriching the rich even further.
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The rates calculated for the original transactions were excluding the crash factor, and now the owners of these gilts can in effect dump these in a wholesale fashion and de-stabilise the already shaky Stirling. Therefore the hush money getting paid by borrowing even more money, sort of paying the protection racketeers with promises of more money next week.
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Meanwhile the trend is to make people poorer and as the rabid right wing scum would wish to stop minimum wage, and take away the barriers to competitiveness, which basically means making everyone across the globe as poor as the next Indian untouchable, or Chinese farmhand. This is then prescribed as a nostrum to “stop emigration” and “start industrial rejuvenation”.
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Slight problem with this model is; money that is getting extorted from the various governments through various tricks, is then invested in the commodities that is pushing the prices of commodities even higher, promoting hunger, homelessness, further depressing the internal markets, while the money made from the ripping off the poor finds its way as loans of high interest rates in the foreign capital markets.
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The spiral of degradation then becomes to be a race to the bottom by all those engaged in the merry go around of the “Conventional capitalism”. This then will result in one outcome; poor eating the rich.
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However those crooks selling snake oil and creating the phoney bubbles, ie the great amounts of debt that is to be paid by majority to the crooked minority, have so far got away with their ill gotten gains, without so much as getting fined the value of a parking ticket, such is the wonders of the deregulated markets.

With £350 billion we could have …
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Probably not. The HS rail from London to Aberdeen would have taken the lot and why should the English taxpayer subsidize railways in Scotland when the Scotch are planning to leave the Union the year after next?
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But in any case, what is the use of a subsidized steel industry? Who’s going to buy the output? Are you proposing tariffs? But if you impose tariffs and exit the WTO, then you don’t need to subsidize steel, entrepreneurs will build the plants to profit from the high prices available in a protected market.
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QE makes good sense in a depression when money supply collapses due to debt deleverage as is occurring now.
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Problem is, for the West, that when the government prints money little of it remains within the community to stimulate production and employment, since you can buy cheaper stuff and services offshore. The only industries that benefit are the distributive trades and the factories that snap together cheap Chinese components.
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There appear to be only two possible solutions to this problem. One is an end to free trade with the low-wage economies, i.e., through the imposition of tariffs, quotas, capital controls, etc., the other is to achieve wage convergence promptly. Since Chinese manufacturing wages are not going to match those in Britain for many years, that means lowering British wages. This will happen automatically if you abolish the minimum wage law. But because at internationally competitive wages some people would starve, you need to introduce a wage subsidy scheme too. In time, low wages will drive down the cost of living and make survival for the working poor possible. And as they gain skills, the lowest paid workers will increase in value and hence in the wages they command.
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But everyone seems convinced that we’re the victims of some monstrous capitalist scam and nothing can be done except hand money out to the deserving poor, without expecting them to do anything for a living.
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Actually, the problem is probably that David Cameron is a pleasant young man with very little practical experience and really hasn’t a clue about what he is doing. Oh, he has civil servants to advise, but who in the right mind would leave the management of the country to a bunch of civil servants who never met a payroll in their lives.

“Hence the gilts bought are by issue of further gilts.”
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Not so, if what is happening has been correctly reported as quantitative easing.

If there is QE, then the gilts bought are bought with money the BoE does not have, i.e., ink money, money out of thin air, money that did not previously exist.
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That’s the point of QE, to get money into circulation, which in this case is done by buying bonds from the public.
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If the bonds were paid for through the issuance of new bonds, there would be no QE.
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Here’s my primer on money printing.

Not so, if what is happening has been correctly reported as quantitative easing.
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Where does this money come from? Ink money?
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So the real IOU/gilt is replaced with imaginary I Paid the bearer/ink money!
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You are deliberately obfuscating.

@writerman – comments may not show up straight away if they are caught by our creaky spam system. It is best to assume it will show up when a mod approves it, rather than posting again – I have done this just now for you.

The idea of QE, which is simply creating money out of thin air, is to increase the money supply.
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Private Banks normally increase the money supply by the amount of debt they create ( loans ). When you get a bank loan the bank doesn’t lend you meny it already has it creates the money out of thin air. however to prevent private banks creating an infinite amount of money out of thin air they are bound by the central bank regulations called the reserve requirement ( or reserve ratio ). This is called Fractional Reserve Banking and the money is created out of thin air through deposit multiplication ( also known as Money multiplier )
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The federal reserve release a booklet sometime ago explaining the process of FRB and deposit multiplication …
.http://www.smeggys.co.uk/smeggy_info/Modern_Money_Mechanics.pdf
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… but simply put, on a reserve requirement of 10% for every £1million deposited into the banking system, the banks can create upto £10million

QE works by creating an initial seed of money to increase bank reserves by buying financial instruments like bonds and depositing the money into the bank accounts of those selling the bonds. The banks then have an increased reserve and thus can then create up to 10 times that amount through deposit multiplication.
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of course the banks have to create the new money through debt and not use it to pay bankers bonuses, and of course on of the complaints about previous rounds of QE was that the banks were being too slow in creating new debt to increase the money supply even after they had the QE injection to increase reserves.
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Always remember that prviate banks control the economy because they create and destroy the money and thus control the supply
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I say ‘destroy’ becuase as well as creating new money out of thin air as new debt, the banks also destroy it again when the loan is paid back. This is why a Credit crunch ( debt crunch ) is bad. All money is debt. As existing debts are paid off new debt is required to top up the money supply, other wise the amount of money in existence decreases, people start hoarding what’s left for longer, thus the velocity of money decreases, and there’s less commerce and jobs are lost, etc,etc,etc, This can spiral down. interest rates are normally adjusted to regulate the money supply, but when that fails QE is employed.
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QE is really just Open Market Operations on a grander scale.
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All money is debt ( an IOU note – I promise to pay the bearer ). Even if you personally have no debts, somebody somewhere is paying back that tenner in your pocket
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The big problem is the Usury, i,e the addition of interest on the issuance of the new money. Remember all existing money is all promised debt. so when new debt is created the money to pay off the usury on it doesn’t yet exist. There’s only one solution for that…. mroe debt.
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and that’s Debt Enslavement 101 folks. it’s a clever system in which the Money lenders have got us all by the balls in an infinite run of debt enslavement and cream off a royalty for themselves for basically nothing but typing a number into an electronic account. They don’t even have to pay to print most of it up as physical notes anymore
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have fun

“Where does this money come from? Ink money?
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So the real IOU/gilt is replaced with imaginary I Paid the bearer/ink money!
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You are deliberately obfuscating.”
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I told you, I comes out of thin air!
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The BoE writes a cheque, which the recipient deposits to his bank account and is then able to spend.
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That’s all there is to it.
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The only difference between you doing this and the BoE doing it is that the BoE does not need to have the money, just a book-keeping entry. That’s one of the joys of being a central banker. The mechanics are probably a little more complex than indicated, but not much. And the interest paid by the Treasury on the gilts that the BoE bought is presumably returned to the Treasury, as would be the case with the US Central Bank.

Canspeccy at 10.06 – it must be very comforting to have such a clear view from (I suspect) a lofty vantage point.
I do not pretend to know very much about economics; however your post chills me. It smacks of a viewpoint which regards “workers” who have a “value” as pawns to be moved around at the will and whimsy of others who by chance of birth, good fortune, intelligence, ambition, etc etc can order others to jump to their command in the interests of what? Growth?
Nah – there’s more to life than that Cantsee.

Someone tell me please, I am curious: exactly how does one become a fat cat banker of the sort that Craig and others here love to hate? No doubt we should avoid so great a sin, of course, but how exactly does one become such a bounder? Just in case I should need to know.

PS. On second thoughts I take it back, Indeed one must avoid and flee from such filthy lucre! Filth! Filth! Let the fat cats roll in their gold sovereigns, and let us value more getting to heaven (and them too if they repent of course, why not?)

Canspeccy
I’ve been working in London this week at a shopping centre. After taking £12 p.h. 8 hours in the freezing cold, I paid £22 parking, congestion charge, and 230 miles@ 25p per mile travel costs. Nett gain: 0
Before Gordon Brown my actual expenses were knocked off my taxable income – happy happy – financial survival.
After Gordon Brown, I now get a Working tax credit, which I live on while my earnings are cancelled by the expenses.
This change by the Chancellor of the Exchequer was pure racism by the office dwelling community against the people who make things work after the offices are closed with the net result that I, who do useful things, earn nothing but have to be subsidised, while they who do nothing and cost millions to heat and air-conditionise, pocket multiple tens of thousands salaries.
QE is more of the same. It is ridiculous for you to suggest that non-productivity being incentivised and productivity being de-incentivised is the only sensible course of action. They told ne at school 50 years ago that we were entering an era of leisure. Maybe this illusion is maintained because so many people are getting rich from work being done out of sight out of mind in the Far East. Doesn’t that ring little alarm bells about the invisibility of the African slave trades?

“The BoE writes a cheque, which the recipient deposits to his bank account and is then able to spend”
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You really have no idea, and are making it up as you go along.
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Is BOE a private company? Who owns it?
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This to and fro debate here seems to conclude on one hand money as debt, on the other money out of thin air ie not a debt but product of the BOE, which in turn is given freely to the banks.
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In this nice world BOE gives money to the banks, and banks then own the lot of us along with the whole of the place, including the government, and the BOE, nice circle jerk.
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However, this remains a mystery; we have the resources, the workers, the markets, and nothing is getting produced, consumed or explored, because of the scarcity of the money an artificial construct that evidently no one around here seems to understand. That is capitalism for you; Oligarchs make you work so they can get you to buy their money so that you can work even more never ever reaching a level of independent from the web of the debt that has been accrued because all the time your work has been worth less and less and even less in terms of the money’s value. Hamsters are inherently stupid, to get into the hamster cage and run for their lives, what does that say about us all to subscribe to the current bankrupt ideology, shoved down our throats as the only way to be?

Q.E. is not such a mystery.
The banks have purchased domestic and foreign sovereign debt (Greek, Portuguese, Irish, U.S., etc.) and other (private) debt (because it looked like a good investment at the time of purchase and offered ‘higher’ interest rates at the time of purchase and because they have had lots of cash sloshing around because the U.S.A. has been flooding the banks and the world with virtually ‘free’ money since 2008).
The banks are allowed to call these debt instruments ‘assets’.
In addition the banks have been ‘trading’ these assets amongst themselves because the banks generate a commission on each sale.
In addition the banks have sold ‘insurance’ policies to each other against the risk that these sovereign bond (and other) assets may lose value (in the case of default by the original issuer (e.g. Greek, Irish, Portuguese, Italian, Spanish, British Central Banks)).
In addition, they have sold and re-sold these insurance policies to each other, each time earning commissions.
In addition they have been both purchasing and issuing insurance policies against such defaults without even having to actually own the underlying debt in the first place and without having the necessary reserve funds with which to pay out the insured in the event of a default.
In addition, the generally accepted previous accounting rules have been changed such that in the event that these assets do in fact fall in value (they have in fact so fallen) then the banks do not have to report such loss on their balance sheets (for if they did, they would be forced to reveal that they probably were insolvent).
In addition, they have been trading U.S.A. mortgage debt (and earning commissions) amongst themselves (and insuring such debt), much of which mortgage debt is close to worthless – again off balance sheet.
These above so called ‘derivative instruments’ are now collectively equivalent to many, many, many times the total world’s annual gross domestic product (some estimate up to ten times i.e. US$70 trillion, others estimate up to US$700 trillion).
If Greece (for example) does default then the holders of its sovereign bebt have at least two problems:
1. How to account for the loss of their Greek sovereign debt assets, and
2. How to pay out to those same insured parties against default.
The bonds’ default clauses are complicated and have been issued under various different countries’ jurisdictions but there’s no need to worry because an organisation has been set up to adjudicate exactly: “what actually is or is not a default at the time of such default”.
You may further rest easy because this organisation has been set up by the major banks themselves and further is staffed by upright, decent and no doubt highly paid members of those same banks.
So what is the Bank of England almost certainly spending Pounds 50 billion on?:
transferring the dodgy banks’ assets (per the above) onto its own balance sheet and thereby making (at least partially) the banks balance sheets whole again and in the meantime ensuring that the British taxpayers are now so liable for another 50 billion.
It has all become the world’s largest Ponzi pyramid scheme, the size of which entirely dwarfs anything since the beginning of recorded history.
The on-going transfer of wealth from the 99% to the 1% is unprecedented.
Only time will tell if it is to continue along this path in which event the banks will likely own ‘everything’.
One may hopefully look to such ‘connected’ persons as yourself to advise the peons as to whether this state of affairs has come about by accident or design.

Rose,
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Insofar as anyone believes me to be possessed of a loft vantage point, that can be attributed solely to the fact that I have over the years made some effort to understand how money is created and what role its management and manipulation has is in the evolution of the economy.
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You suggest that I regard ““workers” who have a “value” as pawns to be moved around at the will and whimsy of others …”
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That is a misconception. In a market economy, there are always to parties to a transaction, and in the case of employment contracts, one of those parties is the worker, who therefore has considerable control over the work he or she does and under what conditions.
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The remarks I’ve made here, reflect my view that the existence of mass unemployment, up to 50% or more among young people in some European countries, as the scandal of the age.
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And in considering what should be done to solve the problem, one must chose among the feasible alternatives, none of which is utopian.
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There are some who would like to go back to the hard left solutions of Old Labour, nationalize everything, have the government own everything, provide the Western equivalent of the iron rice bowl. But this has never worked well. In Russia and China it evolved into a murderous tyranny. And in Britain it was driven by socialists who were enthusiastic supporters of tyranny: Bernard Shaw, who wished to euthenthize those unable to support themselves, the Webbs and H.G. Wells, enthusiastic supporters of the mass murderer Stalin and many other crypto Communists in the ranks of the Labour Party and academia.
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So what is the alternative? A market system, either on a national or a global basis.
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I have long argued for a return to a regulated national market economy in which capital is not free to exit without cost to the lowest wage jurisdiction, where home industries are protected by a tariff wall, and competition is maintained by strict application of anti-monopolies legislation (An idea well explored in the 1990’s by Southern Baptist University economist Ravi Batra).
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But that solution has been thoroughly rejected, neither left, right nor middle want it. What everyone wants is cheap cell phones, ipads, car parts and services from China, Vietnam, India, Turkey, etc. What that means is jobs are going to be wiped out if you try to maintain the existing ten- to thirty-fold wage differential between the West and the Rest. The solution I offer is, thus, the only one that seems feasible given the constraints.
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However, there is much to be said for a properly functioning and regulated market economy. People may not like competition very much, but it is a spur to self-improvement and productivity that can make us all better off and better disciplined. And under a truly democratic government in an age of unparalleled technological advancement, there is no doubt that under a properly regulated market economy the mass of people would be much better off that they are today.
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I did answer your comment, Rose, but the system seems to have wiped it out.
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Perhaps it will reappear in the morning. Suffice it for now to say, that I prefer a market economy to a communist or fascist system such as most people here seem to prefer.
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Moreover, you should remember that in a market system all transactions depend of the agreement both parties to the transaction. That is true in the job market as in any other. Therefore, workers are never exactly pawns in a market economy, contrary to the case in a socialist system, although it is true that sometimes the options are lousy.

For mine, any discussion of usury within its priest (which is to say, banker) supplied Gordian knot definition is a waste of time. The Gordian knot was a con in its entirety and usury is no different.
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Money is nothing more than a means of exchange. To treat the means of exchange as a commodity in and of itself has no future beyond that of a pyramid scam. In both of them the bust is inevitable with the only difference being that usury’s bust takes decades to occur and can thus be misrepresented and blamed on everyone except the makers of it.
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The ancients understood this and that’s why every major religion declared usury a sin. (Judaism is only a soft exception insofar as it bans usury to Jews but permits it to Goyim).
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The idea that a nation should borrow its money from people who never had it to begin with (but merely clicked their fingers and declared it so) and that the people of that nation should then be required to pay it back with interest, and all in real world blood and treasure, deserves a single response: the sharp end of a sword.
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Everything else is bullshit of the impossible riddle variety and will be precisely as successful as all those other experienced knot-tying boy scouts who preceded Alexander.
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But don’t mind me. Best everyone just carry on picking at that knot. The priests said it can be undone and they wouldn’t lie to us would they? Nah.

Monetary policy doesn’t work in a liquidity trap – you miss that point and much of your argument falls down.

@craigmurray

One of the main points of QE is to fund the budget deficit – compare the BoE balance sheet to the government’s funding requirement. Without QE the government would have found it difficult to fund the deficit. The banks role is to take a really big slice off the top – with the bonus that they get to sell their existing gilts at a fantastic mark up. All of this has to be reversed at some point in the future before it turns inflationary and that is when the pain really hits (and the banks get to make another hugely profitable trade then also).

The funny thing is when the BoE started QE a few years ago it was considered extremely unorthodox and untested but now it is completely the norm. It will probably all end in tears but most of the people involved will have moved on by then.

Synchronicity to me is an indication that things don’t happen by chance, they happen because of design and purpose. Atheistic demons don’t like that notion since it would mean that ultimately there is a master plan they are not in charge of.
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There is synchronicity in the way that privately owned central banks together with corrupt governments are creating a world of slaves and slave owners (themselves) through the fractional monetary system and an invented war on terror.
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There is synchronicity in the way the ESM treaty is created in the EU youtube.com/watch?v=vPCKHvCgLnA
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And there is synchronicity in what Tony Farrell, a former Principal Intelligence Analyst at South Yorkshire Police , says here: youtube.com/watch?gl=US&v=azEQRmcfRJk
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Things never happen by chance, there is always a purpose, life is a quest of understanding purposes.
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Why there are so many zionists trolling the commentaries in this blog in not too hard to understand though.

“Monetary policy doesn’t work in a liquidity trap”
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But the Great Depression was the mother of all liquidity traps and the Keynsians assure us that recovery would have been achieved had the money supply not been allowed to contract. But in any case I was not advocating money printing, I was merely explaining what was involved.

“The added value of your theory-led chundering is the net loss of human dignity,as far as i can see.”
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In what way does a policy that would allow the unemployed to find work at a living wage detract from their dignity?
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The added value of your comment, to adopt your rather bizarre style, is outright lunacy, so far as I can see.

‘“The BoE writes a cheque, which the recipient deposits to his bank account and is then able to spend”

You really have no idea, and are making it up as you go along.
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Is BOE a private company? Who owns it?’
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To take those points in reverse order, not the BoE is not a private company. It was nationalized in 1946.
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No, I am not making anything up. I am just explaining how QE works.
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How did you think it worked?
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The Government prints money as and when it sees fit. The process is very simple. Why should it be otherwise?
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But people find it hard to understand for some reason. presumably that’s why Ben Bernanke once remarked “we have a technology, it’s call the printing press.”
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In fact, that’s not the technology that central banks use to “print” money, but its an analogy that people can grasp: the printing of banknotes.

Guano, you made 96 quid for an eight hour day, which is about 94 pounds more than I made in my first job. But you spent 57.50 on travel and 22.00 on parking, which left you with a net of only 14.50, or just under two pounds an hour, which is not a living wage.
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My first thought is that you should look for a job closer to home. But I don’t wish to be flippant. And I am prepared to believe that you would have taken a job closer to home if you could have found one, which means that you are the victim of a lack of jobs, the result of globalization, outsourcing, off-shoring and mass immigration, all of which put you in competition with billions of people in the third world where average wages are only a dollar or two a day.
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And remember, among the four billion in the developing world, there is pretty certainly someone at least as bright as you or anyone else here who would like to take your job or any job you might have a chance at in exchange for the pittance they earn now driving a pedicab, working in a sweatshop or trying to scrape an existence from a tiny patch of soil.
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But if the minimum wage were abolished and job subsidies instituted, you’d have both greatly expanded job opportunities and a living wage, which is better than the condition you are in now.
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What’s more, since you are literate and enterprising enough to travel 230 miles for a day’s work, you’d pretty certainly have a choice of a wide range of jobs and the prospect of rapid promotion.

“OK Fine”: Either seems fine with the BBC, both have been used, nobody appears to be getting all bent out of shape about it, but perhaps you should send a letter of complaint without delay. Let us know how you get on with that, promise?
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Aside from that incredibly feeble whinge, your stamp of approval must be given by default! Given that was your only criticism, and you found the time to read, and respond.

Here the BoE confirms that my explanation of the supposed mystery of QE is precisely correct:
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“Between March 2009 and January 2010, the MPC authorised the purchase of £200 billion worth of assets, mostly gilts – UK Government debt. The MPC voted to begin further purchases of £75 billion in October 2011 and, subsequently, at its meeting in February 2012 the Committee decided to purchase £50 bn to bring total asset purchases to £325 bn.
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The purpose of the purchases was and is to inject money directly into the economy in order to boost nominal demand. Despite this different means of implementing monetary policy, the objective remained unchanged – to meet the inflation target of 2 per cent on the CPI measure of consumer prices. Without that extra spending in the economy, the MPC thought that inflation would be more likely in the medium term to undershoot the target.”
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But while there is no mystery, it remains open to question whether QE is the right policy. As I’ve indicated, I think it is largely irrelevant as a means of ending high unemployment since we have a globalized economy and more spending in the UK just sucks in more stuff from abroad and increases the debt load without producing much employment outside of the distribution trades. The only solution that I can see is to achieve wage convergence with the Asian masses immediately by freeing the labor market, rather than waiting for convergence over the course of years of demoralizing economic decline, social disruption and loss of industrial capability.

Canspeccy
Of course Employment contracts are the responsibility of both parties in most countries, but in the UK the conditions are so completely warped by state benefits and incentives that it nearly amounts to slavery. If I sign up to zero income on the condition of subsidy, and on April 1 the subsidy is removed, I will be on zilch zero nothing.
I agree with Writerman above that the system is wholly fraudulent and I can see in my own case that I will have to self-exile very soon in order to survive. If you export jobs, you will have to export people to follow those jobs. The idea that the removal of jobs will create a vacuum which will be filled by others is wrong. When those others arrive at the same level of fiscal subservience that I am on, and realise that we are in a single-eyed computer system which charges us noise and methane pollution tax for farting, they will also not be able to survive.
The only viable way forward for this country is to have a revolution in which the lying, scumbag politicians who do the will of the Zionist bankers are removed and replaced by moral human beings. I do not think that immigrants who have been accustomed to a fairer fiscal deal in their own countries will be more likely to act against UK fiscal injustice than the indigenous species, because if anything they are more likely to join, rather than resist the system of deception because it is not their country and they have less to lose.

My younger brother, who is a banker, and works in the City, has told me on serveal occasions, that the dirty little secret is, that most, if not all, the ‘banks’ are insolvent, or ‘bust.’ But, clearly, admitting this in public would crash the world’s economy, so… one creates even more ‘insolvency’ or ‘debt’, also known as QE, to paper over this inconvenient truth. How long this ‘Potempkin’ financial system can survive, is debatable.

Furthermore it’s extraodinary that the state/tax-payer is effectively paying banks to borrow from the state, yet with interest rates so incredibly low, or really non-existant, if one factors in inflation; it’s an indication of how bad the economy is really doing, that investment and transactions between banks have almost ground to a halt.

My brother’s bank, for example, swaps ‘worthless’ bonds, or ‘debt’ for gilts supplied by the BoE. They then invest this money in South America and Asia, not in the UK. As he said when we met over Christmas, it’s surprising that the peasansts haven’t strarted to hang people like me from lampposts.

A big problem for the economy is that it’s doubtful that traditional Keynesian remedies will work this time around, if they ever really did. There’s a lot to be said for the radical argument that what lifted the world out of the last Depression in the 30’s, wasn’t Keynes, but the second world war. If that’s true, are we going to employ the methods this time around?

No such word as quantitive. Sorry.
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quan·ti·ta·tive
1. that is or may be estimated by quantity.
2. of or pertaining to the describing or measuring of quantity.
3. of or pertaining to a metrical system, as that of classical verse, based on the alternation of long and short, rather than accented and unaccented, syllables.
4. of or pertaining to the length of a spoken vowel or consonant.

Writerman’s points on QE are even more pointed than the sceptical comments by Larry Elliott in the Guardian on 10 Feb ( see http://tinyurl.com/83uc6tk )

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See also the latter part of my post on this thread at 10.49 am yesterday. If we are looking to reap the benefits of a major war do we see the UK as benefiting on the model of the USA or of Japan after WW2 (or even of rationed Britain, with spivs and unwittingly sowing the dragon seeds that have sprouted as imitative neo-connery a couple of generation later?

O/T A message to Matthew Gould pleading for his intervention to have a stop put to the cruel treatment of this Palestinian by the Israelis has been met with an Out of Office messaage.
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http://www.haaretz.com/print-edition/features/otherwise-occupied-for-the-sake-of-his-dignity-1.411281
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Or HERE
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Otherwise Occupied / For the sake of his dignity – Haaretz Daily Newspaper | Israel News
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Amira Hass discusses the case of Khader Adnan, who has already broken a Palestinian record for the longest solo hunger strike in protest against humiliating practices by Shin Bet security service interrogators.
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Adnan has testified that his hands were tied behind his back, he was thrown on the floor of an army jeep and during the journey soldiers kicked and slapped him. The jeep reached the Mevo Dotan settlement, where he described being held for several hours outside in the cold, with his cuffed hands swelling and his lower lip cut and bleeding.
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The day after this, he was tied to a chair and positioned in an excruciatingly painful way. Throughout the interrogation, he remained tied, his hands behind his back. Adnan says that Shin Bet questioners cursed him and threatened harm to his family.
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According to Hass, Adnan was recently moved from the Israel Prison Service medical facility to a private hospital in Bnei Brak. His legs and arms are cuffed to his bed.
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I agree, Craig. I made up “commenters” to describe people who place comments on blogs etc, to replace “commentators”, which suggests a media professional. If people never invented words we wouldn’t have any.
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Now I want a word like “his” and “hers”, to describe possession by a person in the singular whose sex is not specified or maybe unknown, without resorting to the plural. I find this omission in English most annoying.

Perhaps we should rename you Craig “Humpty Dumpty” Murray, or maybe precise wording is not important in diplomacy. Or maybe even today, words used in diplomacy really do mean whatever Hillary Clinton means them to say. Or, maybe have another dram. Cheers.

Yeah, right, “Sarah Palin invents word refudiate, compares self to Shakespeare”.
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Craig’s misspelling is just that, not an invented word, and betrays a misunderstanding which is shown more clearly by his text.
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Clark’s commenter is not an invented word.

Clark (at 10.44 am), I have long shared your frustration. It adds to the difficulty that we really need the new pronoun to have nominative, accusative and genitive forms and not to seem biased to either of the sexually explicit singular pronouns. The messy compromises of orally and aurally indistinguishable s/he and grammatically incoherent “them” are both unacceptable. Your question has made me grapple seriously with this conundrum for the first time.

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The best I can tentatively come up with – bringing in a false etymological relationship with French rather than Anglo-Saxon – is: tu, tob, tas. The difficulty with this or any other possible solution will be that we have (thankfully) no Academy Anglais to impose a new rule.

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Altogether, one could make a case for saying that the situation is as messy as that of our unwritten constitution. A further complication: what would Alex Salmond think? Should there be a Scots variant? And wouldn’t a USA variant need to have a false etymological link to Spanish?
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More radically, since the 21st century is Chinese, why not use the English language’s genius for encouraging inward migration and take over lock stock and barrel Mandarin’s “ta” for all these forms. That will mean, of course, getting rid of our present linguistic sexual discrimination. That may come not to matter much in an age of decreasing sperm viability and increasing use of cloning and GM people.

But it is not altogether clear to me what is happening from the single news report I have read, probably because the central bank prefers to obscure from public view exactly what it is doing. However, in this case, unless you are aware of evidence to the contrary, I am inclined to believe that the BOE is engaging in a straight forward effort to stimulate the private sector by increasing the money supply. ….. CanSpeccy 10 Feb, 2012 – 6:40 pm

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The problem appears to be that the right sort of individuals* in the private sector are not receiving money supply to spend and generate relief and energise economies, CanSpeccy. Thus are the banks destined to collapse and their executives fated to be considered and treated as ignorant and arrogant pariah/negligent, artificial control freaks?
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* And I particularly choose the word individuals because money/QE spontaneously created wealth is always held in the control of individuals even whenever disguised and gifted as a loan/bail out to a multinational conglomerate.
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Whenever one considers the supposed parlous state of Westernised capitalist/mercantilist economies, with their mountains of ever increasing debt and pretty clear inability to repay, [and one then should be asking …. Repay to whom and for what whenever money is so easily instantly invented in sums as are merely arbitrarily decided/subjectively considered appropriate for systems survival needs/feeds/seeds] is one forced to conclude that the Game being played is systemically sub-prime and failed, and failed a long time ago, with no one smart enough to start a completely different and fundamentally new Great Game.
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And that is a catastrophic failing in human intelligence which delivers every conceivable vulnerability to be ruthlessly exploited by that which delivers ……. well, would that be the Future with SMARTer Immaculate Sources or those who would be ITs Agents of Change?
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I shall invent words as I see fit. Quantitive is more economiocal than quantitative, and its meaning is obvious, And its easier to say. ….
Craig 11 Feb, 2012 – 10:24 am

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And why not, Craig, for it covers up for so much and provides such remarkable stealth too, in some cases.

Knocks on the door in the chilly dawn this morning.
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Eight people held over payments inquiry
Five employees of the Sun were among those arrested as part of the Operation Elveden inquiry
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Five Sun employees are among eight arrested over alleged corrupt payments to police and public officials.
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A Surrey Police officer, member of the armed forces and Ministry of Defence employee were also arrested.
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Picture editor John Edwards, chief reporter John Kay, chief foreign correspondent Nick Parker, reporter John Sturgis and associate editor Geoff Webster were held, the BBC understands.
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The arrests are part of the Operation Elveden probe into payments to police.
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News Corporation confirmed that five employees of the Sun were arrested.
.http://www.bbc.co.uk/news/uk-16996275
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Shame that there isn’t an Operation FoxGouldWerritty ongoing.

Absolutely love it. A heated debate trying to understand the intrecacies of an unsustainable and falsifying financial system, turns to semantics over words.
Clark I’m all the way with you, what point has pedantry got, what has it ever achieved and why are we all so hung up about words when languages evolve all the time.

Unless 70% of all Bretton woods orientated fiancial system fail, we will not see anything different. Off course if we help this failure along to happen faster, rather than drag it out for some more decades of value adding wars and crumbling social system, we will be called just about every word under the sun, including the word eco/terrorists.

Craig, I don’t think you underdstand how QE works. There is no reason why the Bank of England should buy gilts, it is just that they are more liquid than any other UK asset. What matters is how the Bank pays for them, which is with an IOU.

This IOU counts as money and so the money supply is increased. It also counts as part of the reserves that banks have to hold and allows them to lend more money (more than 10 time the amount of QE).

Unfortunately, the banks are unwillin to use this increased lending capacity and so the effect of QE is rather limited.

james c,
Gilts are the “IOU” given by the BOE to some entity in the past with a set coupon value ie rate of return, that in turn has given the BOE to print/issue/hand out money.
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Evidently as per the sophistry so prevalent on this thread the BOE without raising any money ie not issuing any gilts, or bonds goes ahead and prints money to buy back its IOU that it has given in the past, with a view to the banks lending money to people who have no jobs and not a chance of a snow ball in hell to pay back the money they have borrowed from the said banks and then blame is put on the banks for not lending out to people who cannot pay back the amounts they intend to borrow.

The very fact that there can be so much argument with so little agreement, so much misunderstanding, so much disagreement over what the various terms even mean, let alone their implications, seems indicative that economics has got completely out of hand, that it now has more in common with, say, astrology, fashion and connoisseurism than it has with any kind of science.
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Now what sort of organisations routinely submerge important discussions under a deluge of confusion and trivia, and why?
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It’s perfectly simple. People get together to make democratic governments partly as a tool that is powerful enough to keep other, less regulated power structures in check. One governmental function is to gather wealth from where excesses of it accumulate, and move it to where it will actually do some good. Seeing as the distribution of wealth has been steadily polarising for decades, governments are clearly failing in that function. The obvious reasons for this are corruption and the undue influence of Big Money over government.

The 0% stamp duty ‘holiday’ for houses sold for under £250,000 is being withdrawn by Osborne. From 24 March it returns to 1%.
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New deals for buyers as stamp duty holiday endshttp://www.bbc.co.uk/news/business-16989215
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This insurance scheme is being introduced.
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‘Next month another initiative is being launched.
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Under the NewBuy Guarantee scheme, lenders will be able to offer 95% mortgages on new homes without taking on all of the risk if the borrower defaults.
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This insurance scheme will mean that lenders will be guaranteed to lose less money than before if the borrower eventually fails to repay all their loan.
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A spokesman from the Department of Communities and Local Government explained how it would work.’
/..

All this angst over QE and other arcane facets of global mirage finances may become academic if Greece defaults. If the nations of Europe (and by extension the world) are threatened by black holes of debt, then it would seem logical that these debt sinks must simply be cancelled and a pre-designed model of sane balance sheets erected in their place. If the truth is that the banks and other institutions have no foundation in reality, other than the berzerk endgame of a virtual pyramid of utterly fanciful derivatives, then we would be perfectly justified in creating a financial reality which works.

Since we can be pretty sure that the banks are going to get a sweet deal from the “QE”, perhaps the term “buy” is being used only because we rubes wouldn’t understand complicated financial concepts like “hypothecation”.

Now, if the bonds were merely hypothecated as security for the QE loans, the banks would still have them on their books as Tier 1 capital and would continue to receive interest payments on the bonds. Now that would be a sweet deal, wouldn’t it?

Simply wrong, I’m afraid. QE doesn’t “give money” to banks and financial institutions. There are genuine stats out there which indicate clearly that the BoE does indeed buy gilts, mostly from institutional investors rather than banks. It is able to do so because investors are willing to sell, either because they can put the money somewhere equally safe for a low return or because they can invest the money in something that gives a higher return.

QE is intended to counteract deflationary tendencies in the economy. Broad money (M4) is falling because the private sector is paying down debt and not borrowing. People are saving instead of spending, businesses are hoarding instead of investing. QE props up the money supply and boosts spending in the economy through various channels with the intention of keeping inflation close to the MPC’s 2% target. The MPC is expecting a serious fall in domestic inflation this year, and they have started QE in anticipation of this. It remains to be seen if they are right – and if QE is at all effective. Personally I think QE is a pretty weak stimulus and I’m not sure it makes a lot of difference.

QE seems to have little effect on the exchange rate, but there are so many other factors at work that it is hard to tell. QE in theory devalues the currency, but when the economy is deflating, the devaluing effect of QE should help to hold the exchange rate steady (deflation tends to cause currency appreciation).

I agree with you that direct fiscal stimulus would be more powerful. But as with all powerful tools, it carries serious risks and is open to abuse.

[Mod: Trimmed…]
I am a tremendous admirer of the courage and outright honesty of Craig Murray. I have posted my utter admiration for him on this site. But that doesn’t mean that I cannot make fun of him when he misspells a word and then somewhat pathetically defends it as a new word that he has invented. We all make mistakes and humour is the best healer.

Frances Coppola,
Do you live in UK?:
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People are saving? Businesses paying off debts? Deflation?
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The food prices are rising, energy prices rising, in fact the only falling price rates are; interest rates, to discourage any saving, and push the money into the Stock Markets so that the the rich an offload their junk bonds and get their money before the prices nose dive.
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The basic facts the are; BOE buys low yield gilts and pumps out even more money to devalue the currency. the devaluation then leaves the oligarchs to either;
a- join the Euro based on the parity of unity. ie one pound is equal to one Euro.
b- On the other hand with the depressed wages and living standards, UK then compete with China.
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Trouble is neither option can work out, because Euro itself is going through a rough patch, and Japan has been dealing with stagflation for decades, and as yet it is not as competitive as china. although Japanese elderly can look forward to getting abused and kept hungry and in pain because there is not enough funds left in the family to feed these or take care of their medical needs. Therefore the latest health-care bill in UK is setting that scenario up too.

Clark: Your 1.20 pm post is spot on about economics; I’ve seen the subject helpfully compared to alchemy rather than chemistry, a magic art driven by obsessive idealised goals – “gold”, “the free market” – rather than a science that grows in accuracy and sophistication as theories are subjected to rigorous tests or mose productive hypotheses formulated.
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As for your 11.48am mention of spell-checkers, when I tried to type out “My love is like a red, red rose”, Microsoft barged in with “Reduplicated word”.

Well said, passerby, and soon these high prices will reflect themselves in the perfect storm, all it takes is a concerted attack. To alleviate stagflation japan had to conentrate of self sustaining society, something we are really crap at, whether its on the alternative energy sector of with safeguarding future food supplies. I would advocate limited protectionism, guranteed percentage take up of British food stuffs by retail outlets, any ‘busting’ of regs should be heavily fined, they should not be able to [put farmers up against the wall, they have one of the highest suicide rates, still.
Sorry to re-poste but this made my day.:)http://www.aljazeera.com/news/americas/2012/02/2012210205218401882.html

TFS,
Look at the Iceland, there a wholesale change of constitution and a whole new way of governance is emerging, with the old oligarchs on the run from a plethora of fraud and embezzlement charges.
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Greeks will have no alternative soon, yet they would have taken on even more debts which were foisted upon them to pay the interest on their loans.

[Mod: this reply to a deleted comment was left because it’s funny.]
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Am I the moderator? No my friend , I am a pile of encrusted pigeon poo. Very good for the scalp, leaves it red and raw and the hair re-grows thick and strong, just like the recession. Would you like to buy a bottle of Tory-Thatch-n-Thrive 25 guineaus a throw? Or try a free sample size bottle by leaving your email address below.
Permanent scalp shine guaranteed.

It’s said that astrology was invented in order to make economics seem respectable. I know it was said of psychiatry that it produced more theorems in two decades than mathematics in three millennia – economics seems of the same sort, with nothing ever rigorously proved or disproved. It seems merely a flexible structure of justifications for whatever a government wants to do while behind all the pseudo-science and flummery the real world falls to bits. ‘Economics’ is probably just a means of obscuring the fact that simple political judgements have been made, and could have been made otherwise.

Ben Franklin, there is no keyword filtering. A comment of yours and a duplicate were queued automatically by the software because they contained links. Comments with just one link usually appear immediately, but sometimes even a comment with no links gets queued; we don’t know why. I approved the comment and deleted the duplicate. Other comments have been deleted or trimmed because a personal spat was cluttering this thread.

O/T Young Uzbek man faces 30 years in prison for threatening to kill Obama. He fell into a trap when acquiring a weapon. A set up?
.http://www.bbc.co.uk/news/world-us-canada-16992861
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‘A witness said Kodirov contacted an unnamed person, who became a government source, and bought a Sendra M115A1 automatic rifle from an undercover agent on 13 July.
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The agent also provided Kodirov with four hand grenades that had already had the powder removed from them.’

Leo: when I came back from “War Horse” (better than I had exoected) I was rather disappointed to find that your earlier posting addressed to me about speaking Chinese had either been deleted or trimmed out of recognition. I’ll still make the point that while I enjoy being able to speak Chinese I am far from proud of my level of competence. I make a small vocabulary go quite a long way; but I know many people whose Chinese is far better than mine, as well as some who speak several variant like Cantonese and Shanghainese while I’m restricted to Mandarin.
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Your rather miserable tone suggest that you may be a mangy lion who mistook a parcupine for his wife’s hat and tried to take a swipe at her head. The quills are painful; but you’ll just have to wait until a friendly mouse comes along to help you. Good luck.

Steve Keen (Australian economist, one of few to predict huge financial crisis etc.) had some interesting things to say on QE in Debunking Economics. I don’t recall the specifics but I do recall his conclusion that money creation works in the opposite way to how it is described by economics: banks essentially ‘force the hand’ of the central bank when they create loans. The money multiplier is therefore an apparition and QE is thus useless unless the money is given directly to the public.

Ruth, I think that the way you put it amounts to just about the same thing. We get a glimpse of some of it, like the many entries in the register of MP’s interests of £5000 per month for an hour’s work; this looks like simple bribery. Then we see the sort of collusion like the senior MI6 man with his position in BP and the way he behaved over Libya:
.http://www.craigmurray.org.uk/archives/2011/09/bp-profit-from-torture/
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This aspect of government is secret not in the sense that we can’t see the people involved, but rather that we don’t know why certain people make the decisions that they do, or maybe we only work it out years later, and by then most of the evidence trail has gone cold. Then there’s the likes of Werritty, who got away with unknown stuff for years before anyone spotted him because he wasn’t officially part of the power structure at all, and thus escaped scrutiny.
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Then, there’s the propaganda machine, which somehow operates in plain sight whilst generating very little suspicion of itself. Even you seemed affected by this (I was, too), when you were speaking for the opposition in Libya; I doubt that you really support the thuggery we’ve seen there since then. Compare the Libyan atrocities with the contents of Suhayl Saadi’s comment of 11 Feb, 2012 – 4:17 pm near the end of this thread:
.http://www.craigmurray.org.uk/archives/2012/02/know-your-limits-syria/
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When you see a tip, you can’t predict much except that there’s probably an iceberg underneath, but it’s shape, size and structure remain hidden.

Suhayl Saadi’s comment that I mentioned above deserves a re-post even though it’s off-topic here:
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Suhayl Saadi
11 Feb, 2012 – 4:17 pm
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I just got this from a Syrian friend, whom I do not wish to name. I’d asked them their views on what has been happening and also expressed the wish that their family remain safe. It is heartbreaking.
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“My father, mother and brother are fine since they are in Damascus but two of my cousins who are in the army have been seriously injured by the armed gangs who are attacking the civilians and the army and sarcastically are claiming the opposite.
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My country is suffering from a fierce global media war and an internal war with the terrorist gangs who mostly have the same fanatic beliefs as alqaida (the Muslim brotherhood) who will bring Syria to the dark ages if they will rule, and who are doing jihad against the army and civilians as if these people are not Syrians like them. The other side of these gangs are paid people to disturb the peace of the country.
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One of the things which makes my heart ache is that the behind the scenes players, Al Jazeera, Saudi Arabia, Qatar among others, grew hatred between Syrians to create a civil war (divide and rule) which is a new thing because all Syrians from all religions sects political beliefs were an example of harmony and peace.
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As for the government, they are not perfect and it’s so easy to throw everything on the president but the government has done, and is doing, reforms which made a lot of difference in Syrians’ lives which not a single media channel has spoken about. I believe that the media is desperate to make it another Lybia, another Iraq, which I believe is not going to happen because we have friends who know the real situation.
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Syria has always been with the resistance and with the Palestinians since many years and that’s why we are paying for our stands now. As for the shameful Arab League, they remind me of a folklore tale which talks about a village invaded by a foreign army in which all women have been raped except one, and when the other women got to know that the woman was still a virgin all of the women united to rape her! I hope I answerd your concerns and please feel free to share any thing on this topic.”

With certain notable exceptions, the degree of confusion, ignorance masquerading as deep understanding and general bollocks on display here is shocking.
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AJ claims that:
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“A central theme of Keynes’s General Theory was the impotence of monetary policy in depression-type conditions.”
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That is precisely the opposite of Milton Friedman’s analysis of the Great Depression which resulted, so he concluded, from a 30% decline in money supply. And it was Friedman who famously said “”we are all keynesians now.”
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True Keynes preferred direct government deficit spending to buggering around with the money supply, hence his admiration for the brilliant execution of Keynsian policy by Hitler and Hirohito.
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A good many people here seem to favor the Hitler/Hirohito approach, pissing money away of uneconomic high speed rail and other boondoggles. At least Hitler’s autobahnen made economic sense.
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In fact, the Keynesian approach is largely irrelevant now because the problem is not due merely to a lack of demand. People will spend any given amount of money. The problem is that however much they spend it creates few jobs in the west, since the west is competing with four billion people in Asia and Africa who earn only a dollar or two a day. Until A.J. and co get their minds wrapped around that problem they will be no further ahead in the search for a solution.

I agree Mary – the Uzbek man was possibly ‘set-up’ and I suspect they will use him via a CIA handler to gather intelligence on the Islamic Movement of Uzbekistan (IMU, considering it’s objective is/was to overthrow Islam Karimov of Uzbekistan, and to create an Islamic state under Sharia. It would be interesting to hear Craig’s take on this scenario since the supply route through Uzbek is now critical to the war in Afghanistan. – overthrowing the ‘simmering torture President’ is a tempting proposition.

Ruth, thinking further about your comment, I shouldn’t assume that I know what you mean by “secret government”. There are certainly elements of great power that are either hidden from view, or can be seen to be powerful but wield other power outside their acknowledged sphere of influence. And between these power structures there will be links with varying degrees of visibility.
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But do you mean that there is some formal structure with posts or positions within, such that one member knows another member’s responsibilities, and that there’s a clearly defined “chain of command” with declared policies that all members are working towards? This would be secret from outside, but everyone inside would know about it.
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I doubt that such a formal structure exists as such. If it did, we could then postulate a “secret, secret government”, that operated outside the knowledge and authority of the first-level structure that is hidden merely from the “public”.
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I think that many, maybe most of the powerful got to be powerful because they’re ruthlessly opportunistic, that they will cooperate with each other while that suits their purposes, but will stab one another in the back if circumstances make that more profitable, and any level of collusion, cooperation, competition and deception in between.
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But if by “secret government” you just mean power outside and/or above the publicly visible government, and that at any given time it has some structure that has formed spontaneously, then yes, that exists. Absolutely. Certainly.

This little bio made me smile. First the name of the second dinosaur and second how one of the papers was so boring, it made his wife drop off to sleep.
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Mike Taylor
Mike Taylor is a dinosaur palaeontologist, computer programmer and open access advocate, affiliated with the University of Bristol. He has named two new dinosaurs, Xenoposeidon (“alien earthquake god”) and Brontomerus (“thunder thighs”) and written other papers so boring that his wife fell asleep reading one of them.

Methinks y’all need to reconsider what you are likely definitely facing, and certainly hereby confronted with …. and decide upon which fence you want to sit should you be powerless and impotent to act on your own volition/without third party initiative and novel noble leadership, which is just the same as admitting to yourself that you are nowhere near smart enough to think in a new effective way of getting things done differently for a better, positively reinforcing, mutually beneficial advantage which can be shared and delivered to all. Fortunately though would there be others who are not at all petrified by circumstance and so intimidated into such as would be an apathetic and pathetic submission, which appears to be wholly reliant on one remaining in abject ignorance of one’s true condition.
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This has just been posted elsewhere, and highlights the sort of issues you are challenged to deny exist.
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The winners get their profit from the losers. In any given year, between 75% and 90% of all options traders lose money. The world’s banks lost hundreds of billions when the sub-prime mortgage bubble burst. In the ensuing panic, taxpayers were forced to pick up the bill, but that was politics, not mathematical economics.

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And when taxpayers refuse to honour a bill which is not theirs to pay, but which politicians thought they could force them to pick up? What future then for a crooked rigged formulaic system and politicians fronting a catastrophically failing Global Dynamic Ponzi whenever their safe business stewardship credibility and intelligence is evidenced as being a fabulous fraud and exploded myth?

“Hey, DWoTSOT, what’s the alternative? A good old fashioned depression”
_
There is a depression already, you just haven’t noticed because of things like QE and a press that has no curiosity. Propping up bubbles that are inevitably doomed to pop is just moving the problem further down the road and exacerbating it.
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The alternative is to recognise that it is the financial system that is bankrupt, mostly cause by fraud and insider dealing, and not nations. Once that is recognised then enforce existing financial regulations and laws relating to such crimes.
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Why should tax-payers be on the hook for generations just so a few hundred extremely wealthy bondholders of banks have their obscene wealth protected at the expense of the vast majority?
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The Greeks seem to understand this very well.

I think we possibly might be at the end of an era, and that we are not going to emerge from the ‘recession’ anytime soon, if ever. That it’s a semi-permanent recession.
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What’s depressing is the widespread idea that Keynes was some kind of ‘socialist’ or ‘left-winger’, if he was, then it was the adoption of ‘socialist, central-planning’ in the service of the liberal, capitalist, state, which is rather ironic.
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Personally I think it’s bizarre that the politicians are choosing to save the banks and the financial sector by sacrificing the rest of the economy, to put it bluntly and crudely. This is seen most clearly in Greece.
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Restore the health of the financial sector and then, due to ‘trickle-down’ eventually the rest of the economy will get well too. But is this true?
‘
Why did so many highly paid and fantastically intelligent and competent bankers lend so much money to Greece? Shouldn’t they pay the price for lending so recklessly, the full price, and show that markets work, without the state having to step in a rescue them, what kind of capitalism is that?
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They lent Greece money because they knew that if things went wrong the state, also known as the Germans, would be forced to step in a clean up the mess. This is the definition of predatory lending, using pretty much the same methods one uses to ‘hook’ third world countries.
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How could we, in theory, as one model, get out of the crisis?
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Nationalise all the banks, this would really only be re-branding, as they already are effectively nationalised. They the state bank could begin lending to small businesses and industry.
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We’ve then got the problem of lack of demand and unemployment.
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We could by-pass the banks completely and send checks to every household in installments, aimed squarely at the poorest sections of the community. This would massively increase demand for basic goods.
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Start a huge housebuilding programme, and a state financed renovation of existing homes to save energy by raising the level of insulation, which is so dire in the UK.
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Obviously there are lots of problems associated with an alternative, green, economic strategy, because the economy has become so un-balanced over the last thirty years. It would be a real up-hill struggle, not least that so many imports would be sucked in due to the chronic lack of domestic UK industrial capacity. Yet, at least one would be moving in the right direction.
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‘Making Britain more competitive’ is code for cutting wages so we can ‘compete’ with Asia. This is madness, and, arguably, impossible. Making the country poorer before we can get richer is a recipe for disaster.
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The main challenge today is, unemployment and the chronic lack of demand, we have to fix this FIRST, if we are to stand any chance of ever climbing out of the depression we’re mired in. But, as the Irish story goes, about the Irishman giving advice to an Englishman who’s lost and is seeking directions home, ‘I wouldn’t start from here, Sir!’

Put more succinctly, we are concentrating our resources at the wrong end of the economy, and this is incredibly wrong according to Keynes. We should be aiming to help the bottom, not the top. Our economic and social priorities are as wrong as they possibly can be. The bottom has to be lifted up, not, as we are doing pushed down even further. The coalitions policies will never work and only lead to a semi-permanent recesssion.
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Unfortunately, the government’s policies benefit and have ‘saved’ the ‘ruling, financial aristocracy’ from ruin, by putting them on welfare for millionaires. Reversing this ‘class-war’ policy, will require challneging the power structure of society and massive, entrenched, inequality, and how likely is that?

In October there was a 12 day period when the London exchange grew 20%, almost 1,000 points, while trading volumes remained low. Proof of a manipulated stock market – unless there are some fantastically rich investors who want to pay substantially more for stocks than they are worth – oops, that is manipulation.http://www.advfn.com/ftse/FTSECharts.asp?index=UKX
_
There are 930,000 empty residential properties in the UK of which 83% are owned by banks. That’s about twice the amount needed to house all of the UK homeless.

I wonder if they believe that more QE will be beneficial? I suspect that some of them do. Some, of course, are just crooks, but never underestimate the power of belief. Clever people are especially guilty of believing strange things.
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We jest, but I worry. Everything points to one thing: massive FUBAR. Within the next few years, probably. The lies and PR and self-justification will continue as before, until it all goes horribly tits up, and then the recriminations will begin in earnest. It’s curious that the non-economists, the man in the street, can see that the castle is built on sand, whilst the trained economist looks admiringly at the castle, lauding it’s foundations, and telling us all to stop worrying. But there it is.
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If I’m honest, I’ll admit that I don’t quite understand QE. I vaguely grasp the idea, and kind of get the outline, but I won’t pretend to fully understand how it all works. But you do wonder if economists themselves really fully understand how it works. Craig’s theory that the money is going to buy shonky debt is perfectly plausible, and in fact rather likely. But we don’t hear to much about this from the experts; experts, what do they know?

One day Little bank & friends ask for silver to be returned.
Big bank asks if they will accept some more paper.
Little bank and friends agree to accept more paper.

Everyone soon forgets all about silver and now there is only good paper and soon there is also some toxic paper created by Little Bank and some of its clever friends.
Little bank runs out of good paper but has plenty of toxic paper.

Big bank prints more good paper and distributes to little bank and friends. Its not really so good because there is so much of it and it yields very little, but so long as it is printed by big bank its good paper and makes up for all the toxic paper. The low interest means that Little bank and friends can profit.

Big bank’s yield on their recent paper is so low they need to sell more papers to Overseas big fund.
Overseas big fund gives very good paper for Big bank’s promise to pay with its good paper.

Big bank gives little bank and friends some of its newly printed good paper and little bank and friends return some of Big bank’s older good paper.

Everyone can see that Big bank is able to sell its newly printed paper and that there is market from big bank to buy back this paper with new paper. Everyone i.e. Overseas big fund, little bank and its friends all join in buying Big bank’s good paper and they are all confident that Big bank will buy it back off them. If they don’t want it they can return this good paper to Big bank for other good paper.

Clarke,
What I mean is that ‘… a vast apparatus of permanent unelected Government exists. This permanent Government consists of senior civil servants, intelligence and security officers, key figures in certain city and financial institutions, key industrialists and directors of major monopolistic companies, senior politicians.’ I also mean that they control a vast web of secret companies and resources.

James C is absolutely correct about how the QE process works, and if anyone cares to look at the the Bank of England balance sheets on their website they will see that this is what is happening – they really are buying almost entirely gilts rather than something else as Craig and others are suggesting.

James C and others are also absolutely right as to why it isn’t working – although the banks now have more than enough liquidity and capital they are just not lending more into the economy (in fact quite a lot of studies are showing that they are lending more than would otherwise do but the impact on the real economy has been pretty marginal with GDP being c1% greater than it would be)largeley because there isn’t much demand for additional borrowing from said economy. Project Mercury is a bit of a farce, largeley because the targets are set based upon gross rather than net lending to SMEs.

So what should be done – well as well as not cutting the deficit now I quite like Robert Skidelsky’s proposal that the QE funding should be provided to a bank that it is prepared to invest – i.e a National Investment Bank (or perhaps one based on the existing Green Bank) rather than the current shower who think that they are still entitled to bonuses when their profits and share prices fall. Obviously politicians might want to interfere and mess around with the investment criteria used by such a bank in making its loans – but such a risk could be managed by proper oversight by a few real bankers, assuming that there are still enough around to remember what a bankers role used to be.

It is hard to take your views on economics seriously – which seem to be a deep belief in free markets and keeping government interference to a minimum except that this should stop when it comes to the White Cliffs of Dover. But oh you live in Canada!

I’m impressed by many of the above contributions, especially Writerman at 8.14 and 8.21 am today. However, this can lead to disempowering despair eg his final sentence “challenging the power structure of society…how likely is that?” A traditional Marxist response is to hope for more of the same and revolution. However, most of the voodoo economics comes from the Tea Partying neo-cons. It’s worth remembering that there are other directions which get support from traditional economic analyses.

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For example, see Wenchao Jin et. al. “Poverty and Inequality in the UK:2011″, Institute of Fiscal Studies May 2011. Also (though some of the the maths and stats are beyond my grasp this sane reminder of the blindingly obvious:
“Since rich individuals are probably more likely to employ avoidance practices, the government levies heavier taxes on those who are less well-off, which will not only increase vertical inequality but may slow down the development of small businesses and economic growth.”
Tatiana Damjanovic and David Ulph (University of St. Andrews St Salvator’s College, KY16 9AL, UK) Tax Progressivity, Income Distribution and Tax Non-Compliance. September 15, 2009. Text of the full article is at http://tinyurl.com/7pf35gl . [I take pleasure from the authors’ being at the same college whose Master carpeted me in 1962 for publishing a “pornographic poetry magazine”.]

Unfortunately, the government’s policies benefit and have ‘saved’ the ‘ruling, financial aristocracy’ from ruin, by putting them on welfare for millionaires. Reversing this ‘class-war’ policy, will require challneging the power structure of society and massive, entrenched, inequality, and how likely is that? …… Writerman 12 Feb, 2012 – 8:21 am

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How very odd, Writerman, that you do not see that governments’ policies and markets’ actions have exposed and are highlighting the rigged and easily abused ways in which control of paper money, which has now morphed into the electronic transfer of notional sum of spontaneous, arbitrarily decided fiat currency wealth, renders you slaves to misery, and the whims of those who fool you into thinking that everything can be bought and therefore great wealth is an overwhelming power, rather than a global indicator to any and all of that which needs to be addressed and/or physically attacked and destroyed should things not change beyond present recognition and perception.
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It is illogical to not think, and to think that things do not radically change and evolve, and to imagine that the status quo position is tenable and to be supported, is to display a lack of intelligence which allows systems vulnerabilities to be ruthlessly exploited and old wealth to be transferred into new virtualised programs replacing old analogue systems.

I’m not a ‘Marxist.’ I rememeber reading somewhere that Marx himself once lashed out and cried, “I am not a Marxist!” in reaction to the rigid determinism of many of his followers, who perhaps didn’t fully grasp the complexity of his observations and theories.
‘
I haven’t actually given up on the possibility of radical social change. In many respects I think we are in a ‘pre-revolutionary’ period. ‘Pre-revolutionary’ in the sense that we’ve been moving in the wrong direction for at least thirty years, and changing course is goinf to be extremely difficult.

The challenge of our present era how to mobilize the middle-class into resisting their own ‘pauperization’ which is intimately linked to the gutting of the traditional welfare-state model, on which so many of their careers and life-style choices are founded.

A ‘pauperized’, intelligent, educated, unemployed, and resentful, middle class who sees their traditional routes to social advancement being closed off, is a potentially ‘revolutionary’ force in society.

‘A ‘pauperized’, intelligent, educated, unemployed, and resentful, middle class who sees their traditional routes to social advancement being closed off, is a potentially ‘revolutionary’ force in society.’
Ameen

What should one call this new era Writerman?, you exceptional posts need developing. This new era, were justice, human rights and equality are displaced by hegemonial lambasting, geo strategic wrecking and pseudo financial sticking plasters, could be called the age of Leviathan, rather than a less suitable ‘end of history’, for it is the one and only neocon who is stalking the globe in pursuit of its hunger for more of the same murder injustice greed and chaotics.

I like your solution to this calamity, Brendan, concentrating on those at the bottom who are able, with a little push start, to help themselves. We have to start loving self stustainability, limited protectionismn and bartering. Hording silver and gold will not solve high food prices or feed you, but growing you own will take the sting out of your pocket, swapping seeds and foodstuffs locally will become vogue, local markets are an essential to promote in such bottom centric economics.
Ruth is right in her presumtion of an unelected Government and for that reason this country needs a revolution, nothing less will do, sadly, because those you speak of Ruth, have become accustomed to their positions and traditions for far too long, they will not want to move or share, in unison with those at the bottom, so they have to be moved from their perch, indeed the perch itself should be abolished, central Government and centrally lead politics have merged with the aims of Leviathan and hence, had their day. The centrally lead and organised politi is dead, parties are lost for ideas and are clasping at starws, youth parliaments and false competitions, are designed to grow the next generation of yes sayers, under the disguise of particpatory democracy, rather than acting on mandates received, new young faces are groomed for a repetition of the old same formulae.
looking at the education system, I’m not surprised that some parents and teachers are taking it into their own hands, education otherwise has grown out of all proportions and firneds I know are only too happy to school their kids themselves, or in small groups, sharing tuition and such like.
Whatever Independents once represented, today they have a new palette of policies they can proffer to voters, but it would take a united Independent movement to do it. A common, ten point policy anker could moor these Independents into their respective locales; together with decentralised power and a drastically cut down centrallity in Westminster, one could establish a proportionally elected english parliament, increase constituencies and leave the supra national agendas to a strict rotation of locally selected/elected few who keep up the international relations.
With modern comunications there is no need for ambassadors in countries that cooperate with a new global agenda, no need for civil servants and hangers on.
Our royal family can decide where to live and where they want to spent their summer holidays, they will have to live sustainably, or face the consequences. Curtailing their multiple incomes from their businesse gained through their preferential status must be contemplated. Other royals live within their means, no shortage of good examples. With this exciting thought I leave to make some bread.

Ruth, the parties you name certainly wield vast power that is unaccountable, but I’m not sure that they can be regarded as a government. As to permanence, I suppose members must come and go. Obviously, some of them must die from time to time, but there must be other replacement, too. Occasionally someone gets caught and has to be taken down a peg or two. Then there are new arrivals, as some person or organisation acquires more power than they/it had before.
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Then there’s the matter of national boundaries. Does it make any sense to consider the “secret government of the UK” as separate from that of the US, Russia, or France? These parties that you mention – “key figures in certain city and financial institutions, key industrialists and directors of major monopolistic companies” – are members of multinational or global organisations. If their power is wielded in the “secret governments” of multiple countries, then these multiple “secret governments” have some degree of overlap.
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Maybe this is all just semantics. I suspect that the only qualification for being a member of a “secret government” is the possession of power itself. So long as someone holds sufficient power they’re a member, but if they lose that power, well, what use are they then?

Some quantitative killing and injuring by the Israelis overnight.
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12 February 2012
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One killed in Israeli air strikes on Gaza Strip
One man has been killed and four others wounded in Israeli airstrikes in different parts of the Gaza Strip.
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Israeli warplanes fired three missiles shortly after midnight on Saturday.
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A field to the east of Gaza City was hit, with another missile landing near the border with Israel and the third near the city of Khan Younis.
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The Israeli army confirmed the strikes and said in a statement that “the aircraft targeted sites belonging to terrorist organizations.”
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“These sites were targeted in response to the rocket fire on communities in southern Israel,” the statement read, according to AFP news agency.
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The statement noted that a rocket fired from Gaza on Friday had lightly injured an Israeli woman in the Hof Asheklon area.

Writerman/Iain – I echo Ingo – nomenclature. What to call it/us? I would place myself into some of the groups you name – certainly resentful – but recognise that like all of us here, am an awkward bugger and not easy to classify – the “sky ” bit of the Eternal Jigsaw if you like.
And come on Iain – add to the gaiety of the nation and show us what you did all those years ago. Let us be the judges of what is pornographic.

Clarke,
What I mean is that ‘… a vast apparatus of permanent unelected Government exists. This permanent Government consists of senior civil servants, intelligence and security officers, key figures in certain city and financial institutions, key industrialists and directors of major monopolistic companies, senior politicians.’ I also mean that they control a vast web of secret companies and resources. ….. Ruth 12 Feb, 2012 – 10:33 am

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And of course, Ruth, one mustn’t forget numerous other old government cabals, for whenever parties lose power and supposedly then slip into opposition, those who then leave the immediate media spotlight of daily soap and political punch and judy stage would still have old alliances and past acquaintances/sensitive, national secrets to nurture and milk to keep them in clover.
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One needs to look no further than Blair to see the truth in that. And all of them working against each other and trying to prevent their powers/controls from being outed/eroded. No wonder there is collapse and chaos.
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And yes, I suppose Mr Brown is an exception, but then he never ever did really “get it”, did he. And quite what Cameron is hoping for, with his headless chicken routines and posse of populist SpAds, suggests he’s never gonna make it out of the baby pool, which is just as well considering what tender, easy meat he’d be for the sharks should he ever venture into the deep lawless waters of the Great Game.
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Do the intelligence services, as a matter of routine, monitor their every communication? And if not, why on earth leave such a glaring hole in international security wide open to abuse? It is not intelligent, is it? In fact, it is incredibly stupid and naive, methinks.
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J’accuse, MI5/MI6/GCHQ.
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Hell, Werritty and Fox and Gould were pissing all over them, weren’t they?

I’m perfectly well aware that we are in a depression. I have attempted merely to point out that:
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(a) Craig’s comments about QE are all rubbish, and that what the BoE is doing is what it says it is doing, which is buying gilts on the open market to inject newly created money into the system;
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(b) that neither you nor Anon_TOAO, nor anyone else seems to grasp the reason why we are in a depression, which is globalization.
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James Goldsmith spelled out the consequences of entering into free competition via the 1994 GATT agreement with four billion people accustomed to wages about 3% of those prevailing in the West. So far, convergence has raised manufacturing wages in Asian from 3% of the rate in Europe to about 4%. So any stimulus mostly flows offshore, and is gratefully received, no doubt, in Asia.
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Contrary to your assumption, I have no special preference for protectionism. What I have stated here is that Britain will either have to resort to protectionism or it will have to achieve wage convergence with the third world before the recession, as measured by unemployment, is ended.
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There is nothing mysterious about the strength of the stock market. Corporate profits are at an all time high — that’s what globalization is all about, cheap labor big profits. So why wouldn’t people with cash buy stocks?
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And when the BoE and every other central bank engages in QE on a regular basis what better assurance can you ask for that we are not heading for a 1930’s-style liquidity trap, which A.J. claims is already here, although the inflation numbers refute that.
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The parallel to worry about is Weimar or Zimbabwe. If you have cash, the smart thing is to invest it in real assets, stocks of multinational corporations such as Apple Inc. that benefit most from cheap Asian brains and manufacturing skills being, it would appear, a good bet. Not that I’m recommending AAPL. Like Warren Buffet, I don’t understand tech companies and wouldn’t buy them.

or have a Times sub s/be or has a Times sub
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I hear that Murdoch Snr is hastening over to save what’s left of his tabloid following the arrest of five of its executives. I have heard it being said that there is going to be a big clamp down on ‘press freedom’ (?what press freedom?) following Leveson’s findings.

Maybe the new social order could be called neo-feudalism. With the ‘aristocracy’ holding most of the companies, banks and resources here and overseas. As there will be vast unemployment, people will be desperate for a job and willing to take anything, however low the wage. They’ll do whatever to keep their jobs and become servile to their masters. Maybe they won’t have to go and fight for his wars but they may have to carry out corrupt practices for him, which might indirectly involve wars of acquisition. Any social benefits will be reduced dramatically so they’d be no reliance on them and anyhow receipt of benefits would involve compulsory unpaid work. People will gradually lose their homes which will be bought up for a pittance by ‘the aristocracy’. Government organizations such as the NHS will be in private hands, with ‘the aristocracy’ gleaning their share of the profits. Courts won’t serve justice but the master’s needs. The process of the courts becoming secretive instruments to hide the ‘aristocracy’s corruption and greed’ is becoming increasingly prevalent

Ruth, that’s possible. Or maybe money will become worthless and lose its hold over the minds of the majority, who will begin working with and for each other instead of for the elite. Perhaps, with any luck, when the markets crash a load of the bastards will jump out of windows like they did in 1929!

I was very moved by a documentary about the Mir space station after the collapse of the USSR. The Russian space programme continued, its employees worked on for no pay, and their communities supported them.
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We don’t actually need money at all, not like we need air, water food etc. If the money became worthless, but everyone just accepted it and carried on doing just what they always had done, everything would continue to work.
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Still, there’s little point expecting sane behaviour from humans, of course.

Anyone seen the Greek riots?
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Looks as though the Greeks are no longer buying into the crap fed to them, half want out of Euro, and all want to stop all the debt repayments. The world has become Africa at this time; massive debts taken out by corrupt ruling elite, at extortionately high rates of interest, and paid for by the poor nations that will remain poor for eternity.
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Canspeccy
I know you would like to squeeze the square peg of QE into the round hole of job exportation. And this time you have cleaned up the ecoli-like bugs of racism or protectionism that lurk around job exportation. What’s good for the third world is ultimately good for us, I agree.
But the problem is that the gamblers in the banking world get a high from boasting about their wins, without mentioning the other punters who are losing, like Greece, Iceland, Ireland etc. The gains in the third world and Global companies are real and profitable, but the gains squeezed or rather throttled out of these loser countries are false and toxic/ virtually untreatable.
You’ve mixed them all together. QE is not needed for the purpose of creative productivity, it is needed to lie about and perpetuate rotten gambling risk-taking in places like the City of London. The depression is not caused by exporting jobs to foreign workers, but by allowing criminal activity to syphon off the affluence created by exporting the jobs instead of the promise of Mrs T. that it would come back into the pockets of UK workers.
Which criminal activity? 1/ Interest which is a tax on borrowing. 2/ War-making which is transfers wealth from us the people to arms manufacturers. 3/Printing money QE which pays real money to bankers and leaves IOUs in the banking system.4/Profiteering from shortage of money supply so that real-money can buy up assets and companies for bargain prices. 5/ Covering-up the truth about the economy. (Chris Huhne didn’t resign for speeding but for the accusation of having attempted to pervert the course of justice i.e. lying.
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The government is not doing ‘exactly what it says it is doing’. It is using a manufacturing boom in the third world/ financial markets to cover up these deeply corrosive criminal practises. I can go and find a job elsewhere, but if the police are turning a blind eye to the criminal activity, the whole of the rest of this society will be sucked into the degradation of their criminality. We need to ‘hang’ many more Fred Goodwins on ‘gibbets’ round the City of London.
By which I mean of course expose their crimes in reputable newspapers to make them wince a little out of loss of pride.
The government is not governing and they have stitched up the ability of any one else to restore government to governing.

“What’s good for the third world is ultimately good for us”
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LOL, I didn’t say that, and in any short-term perspective it is not true and as the socialists have been telling us for decades, Western prosperity has all been the result of a zero-sum-game that pauperized the third-world for our benefit.
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“QE is … needed to lie about and perpetuate rotten gambling risk-taking in places like the City of London.”
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Twaddle. Bailouts are bailouts, QE is QE. The QE recently reported by the BoE is just that, and has been undertaken for the reason stated by the bank: to prevent inflation falling.
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“The depression is not caused by exporting jobs to foreign workers”
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This is just the cloud cuckoo BS continually pumped on this blog. That it is BS is evident from the fact that no one here, certainly not Craig Murray, ever rebuts the James Goldsmith thesis; namely, that competition with people earning pennies an hour means a collapse in western living standards.
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But although as I pointed out above, QE does little to stimulate the economy because any resultant extra purchasing power mainly flows to the benefit of those in low-wage economies, it will in the long-run serve to achieve the wage convergence that is necessary in a globalized market if employment in the West is to be revived. It will do so by lowering real wages, while nominal wages remain stagnant. In the last year, the pound has fallen around 5% against the US dollar and the dollar isn’t exactly rising against commodities like oil and gold. So, yeah, QE is the only solution, if you reject protection, as does the elite for whom you and Craig Murray knowingly or otherwise speak.
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I wondered who would be the first to use the race card in a debate purely concerning economics. Your moniker suits. Crap indeed.

The Germans and French through a banking three card trick, have been able to inflict austerity on the Greeks. One might consider , a recent study found that further cuts making the economy worse and contract rapidly. Some 14 % reduction in household income for the Greeks with these policies, and thus continually downward with reduced spending power and the economy further contracts. The interest payments on the debt are estimated to escalate to some 77%. In the final analysis, if the people want to eat, the women become prostitutes and the men are the pimps. The global system, as we know it will implode – this is starting point and kick off.. So these cuts would, at best, allow the nation to keep its debt load where it is.

“The Germans and French through a banking three card trick, have been able to inflict austerity on the Greeks.”
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What was the alternative?
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The Greek government was spending more than it took in, while Greek government employees received, in many cases, better wages and pension benefits than government employees in more successful economies, particularly Germany.
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The only options appear to be (a) spending cuts and higher taxes, or (b) Greece to exit the Euro, and the resuscitated drachma to to have an exchange value that in effect lowers all wages in Greece. That would provide Greece with an economic stimulus to boost employment and hence government revenues.
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The only other possibility that has been raised is for the Germans and a few others to pay Greece subsidy in perpetuity, something the Germans object to and something that the Greeks feel the Germans should be obliged to do as war reparations: not a promising basis for an agreement.

I would concede a point in terms of a social aggregation, but the point at issue is the financial/economic aggregation.

There are discernible differences in social and cultural practices between, say Germany vis-à-vis Greece. However, the Greeks too have their intellectuals, scientists and highly competent people. Others also exist – hence my use of the term “aggregation” – social/financial/economic.
The debt to GDP ratio is one point of reference. Some 175% – so how does one address Greece’s national debt exceeding 175 % of GDP?
Did Germany and France find a way to have bonds and debts impact Greece, or did investors view Greek debt so risky and bonds were deeply discounted in the resale market? This then escalates yields. With those high rates can , Greece then refinance existing bonds as those come due.

So, bondholders can accept new notes having longer maturities paying far lower effective yields and the depressed notes presently currently held, so Greece defaults re. future bonds coming due. Bonds facing longer maturities have lower effective yields and these become worthless and will be less than face value placed on the resale market. We are faced with options of default or some sort of rollover for a desired soft restructuring. Bond rating agencies now enter the picture, and considering the interests they function for and serve, what can they do but – declare Greece in default. What next – riot or revolution?

The Greek government was spending more than it took in, while Greek government employees received, in many cases, better wages and pension benefits than government employees in more successful economies, particularly Germany. ……
CanSpeccy 13 Feb, 2012 – 12:42 am

Note it has the UK holding $242.5 billion of US Treasuries in November 2010 and $429.4 billion a year later. That’s a >$180 billion increase in US debt instruments held by the UK in one year! Who knew the UK was so awash with cash!!!

Courtenay,
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I can’t say that I really follow your argument. Greece’s problem seems quite simple. The public sector has been overpaid relative to the country’s ability to pay, while the government has failed to keep its agreement to limit government deficits to 3% of GDP.
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Instead, when the Papandreou government was elected, a review of the books revealed a deficit equal to 12% of GDP. This set off a panic and the IMF was called in. The IMF found the deficit to be not 12% but 14% of GDP.
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Naturally yields on Greek bonds rose sharply, since the likelihood of full repayment was now seen to be slight.
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Concerning the benefits of public sector employment in Greece, the NY Times reported:
>…the Greek government has identified at least 580 job categories deemed to be hazardous enough to merit retiring early — at age 50 for women and 55 for men. …
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Greece’s patchwork system of early retirement has contributed to the out-of-control state spending that has led to Europe’s sovereign debt crisis.
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… As a consequence of decades of bargains struck between strong unions and weak governments, Greece has promised early retirement to about 700,000 employees, or 14 percent of its work force, giving it an average retirement age of 61, one of the lowest in Europe.
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Hair dressing is one of the job categories deemed hazardous enough to justify early retirement.
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The Athens rail system spends four times as much on salaries as it receives in fares. Many riders, apparently, don’t bother to purchase a ticket, but the average salary of rail system workers, including cleaners and ticket collectors is reportedly around $96,000 per year.
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Then there’s the peculiar Greek custom of paying civil servants 14 months’ wages each for about eight months of actual work (the receive and extra months pay at Christmas and mid-summer).
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There does not seem any evidence of bank swindling here. Just corrupt government buying votes.

AMFM,
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I don’t know much about the US budget problems. However, in part at least, entitlements have been paid for through a hefty social security tax — something like 15% of earnings, I believe. So, in part, those so-called entitlements are in fact bought and paid for and constitute a property right. At least, that is what Reagan’s Deputy Treasury Secretary, Paul Craig Roberts, asserts.

@Ruth. Would neo feudalism not give a bad name to feudal societies that have worked, for better or for less, some still work today? The monstrous neocon activities that are forcing/determining our future, who accuse others and become judge and jury at the same time, don’t strike me as feudalist. Feudalists have an intrinsic link to their people, it is strictly bound in traditions and rituals which involve all.
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I refute the blatant vogue niceties that are flying around putting the blame for the Greek insovencies, bloated and overpaid public services and cleptocratic politicians on the Germans.
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Has the time come, when we need to see people who use cheap nazi slurs, as well as MSM wannabe’s and postulaters using ww2 connotations, for anything they not quiet understand, the same as we treat those who level anti semitism and racism at us?

Clark Thanks for that or perhaps not! What a deeply unpleasant piece from that gay site on the Gareth Williams story. I have sight of the original now. It is a long and serious piece of investigative journalism which gives emphasis to the fact that the police have not solved the grotesque murder of this young man and that there has been disinterest by the authorities. I thought the ‘fagburn’ piece belittled Gareth Williams and his memory.

Clark Thanks for that or perhaps not! What a deeply unpleasant piece* from that gay site on the Gareth Williams story. I have sight of the original now. It is a long and serious piece of investigative journalism which gives emphasis to the fact that the police have not solved the grotesque murder of this young man and that there has been disinterest by the authorities. I thought the ‘fagburn’ piece belittled Gareth Williams and his memory. ….. Mary 13 Feb, 2012 – 9:05 am

Hi, Mary,
It is hard not wholeheartedly agree with ….. No, wait – there is more sinister skullduggery afoot!
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“From the point of view of the intelligence services, failing to prevent an assassination of an operative in the very shadow of the MI6 headquarters at Vauxhall would appear hopelessly inept — especially if a previous break-in had flagged up the building as a possible target.”….. given the evidence of that which has been made known.
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And if not an “outside job” and a foreign “attack”, then any budding Sherlock would be mulling over the probability rather than possibility of some internal Kellyesqe housecleaning to cover up shenanigans that bring down insecure security establishments?
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And quite perfect spy script material for a SMART Bond Style movie about dodgy bonds rendered worthless because of a lack of intelligence at the head of supposedly intelligent corporations and Intelligence Communities ….. and the live algorithms and dynamic programs which create, deliver and support them? Does anyone here know any SMART movie moguls/directors/producers?

My point is that the problem is about crime, not economics.
For example if you force everyone to abstain from buying land in green belt areas and surreptisiously inform your supporters that you are going to change the rules and then do so when in power, or similar in the NHS completely absent from Tory manifestos, you are doing the equivalent of insider dealing, which is a crime.
Your big foot sometimes seems to get stuck on both pedals, slagging off others and crawling to government policy. No. Governments engage in criminal activity, kill and terrorise millions, and actively undermine countries that are supposed to be our political partners. You approve of all of that, but you can’t stand others who don’t approve. Who cares about the economic argument if you get the moral argument wrong? Economics is figures, morals is peoples lives. It is slowly becoming apparent what sort of callous scumbag you really are, like a blown-up flea of Gordon Brown.

The universal ignorance about the complete con of QE has its roots in the dire reporting of it by the entire conventional media. The result is that the electorate has no idea what a scam QE really is, otherwise there WOULD be riots, since QE is de facto the worst possible way of stimulating the economy. The BoE would be better off giving that 300 billion away in tax holidays for the poor, direct injection of funds into proper infrastructure and improving roads, rail, public amenities and directing those vast funds into something useful.
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There is simply no point in writing out cheques to banks, since that cash is going to be funneled away well before it makes it into “the economy”. Banks won’t lend to businesses who have no customers no matter how much cash you give them! You cannot create bigger markets by subsidising businesses who already have stockpiles of goods that the over-taxed cannot afford to buy.
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If you must artificially stimulated the economy (which will create even more debt in the long run), then giving it to small businesses who cannot even sell current stock, so they create even more stock they cannot sell either, is nuts. The only way you can stimulate in this fashion is to increase the spending power of people.
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Instead, the Government continues to tax people out of existence (now all tax taken as a whole accrues to OVER 50% of average earnings), meaning the average employeee now has to work from January 1st until JULY until they actually get to keep one penny of what they earned! Meanwhile, if you have a salary of £1 million with a bonus of an further £2 Million per annum, you still have a fabulous sum to spend even after paying the top rate of tax.
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QE is a disaster and serves only those who control money.

Ingo,
Surely feudalism was a means of maintaining wealth, power and control in the hands of a few.

Ruth, yes and it still is. Most of Polynesia and Micronesia are governed by feudalism, although now they are slowly changing to other forms of Government. Feudalism has worked for some, in its purest forms it might still serve a ruling class/King/village elder, but it is more hands on, there are some connective rituals and traditions that have survived and that are inclusive, they have never known of any other system, or have rejected them in favour of what they had going for so long.
BTW. Is a caliphate a feudal system?

Canspeecy,
All that you state is noted. Wasteful public expenditures, no doubt, feed deficits. And, we also need to put things in current context.
None of the bailout money goes to the people, but to the banks in interest payments.
The economy is not fixed by assignment of the bailout money. The lending implies cuts in public spending; social unrest; no job creation; fire sale purchases of Greek assets – and nothing likely to fix the Greek economy despite the billions assigned, until the next bailout.
George Papandreou first agreed to an EU bailout, then the people wanted a referendum on the issue and then Papandreou eventually resigned. By the time he did resign Greek bonds took a big hit and maybe 50% of Greek bond value was lost. This sent shock waves into the global market.
Your point Canspeecy is that overspending is reflected in the deficit, and is a cause of the Greek problem. I agree, that too has to be fixed. However, if one destroys social infrastructure and elements necessary for economic recovery – health sector, education, jobs and skills training etc. how does that fix the Greek problem – only makes it worse.
Are Germany and France heaping unworkable borrowing and high interests rates on Greece?
Why would banks lend, if the situation of the borrower does not permit realistic chances for repayment?
The banks misguided lending policies caused sums to be lent in ways that were never viable. The Greeks are now placed in a debt and austerity trap with no prospects of a solution of economic growth – so, how does this solve anything?
I accept many of your points Canspeecy. There are others to be made as well if Greece or the Eruo are to get any lasting fix and be viable.

“I was very moved by a documentary about the Mir space station after the collapse of the USSR. The Russian space programme continued, its employees worked on for no pay, and their communities supported them.
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We don’t actually need money at all, not”

If you had seen the misery caused when the payments system of the former Soviet Union froze up – and people in many industries were not paid for many months, and in some case tried to resort to barter, I very much doubt that you would make such a comment. Alcoholism went up sharply, male life expectancy fell suddenly and corruption was given one hell of a boost as factories with little access to finances were often soild on the cheap to members of the nomenklatura. I’m afraid losing money usually means that those with access to the little that remains or foreign currency are able to call most of the shots.

Rose/ Ingo etc. I’m happy to add to the gaiety of nations, delayed by a PC glitch and a hospital appointment. However I disclaim any talent, for writing pornographic poetry. My skill was as an editor who helped publish the cyclostyled “St Andrews Poetry” in 1962. The poem that got up the Master’s nostrils was by a good friend, Harley Millar, who has given me permission to quote from it.
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“The Scent Of Bitches”
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Shut your filthy trap
You stinking slut.
Put your bloody lipstick
Smooth on you beautifully-proportioned bom.
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I want to meet the you –
Strip off you sweaty small-talk brain, Propriety,
Show off in your own, uncopied way
Or piss, you bourgeois bitch
On my introductory nose.
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The reason the Master even read the poem was that the aunt of a female student – who had sent her a copy of the magazine – received by the same post an appeal for funds from the University. With indignation she wrote to Johnny Wright (the Master, and also my Professor of Logic and Metaphysics) on the lines “How can you expect me to support a university whose students write such filth?” I was enjoined to mend my ways. Not sure if I have done so.
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As a postscript, on University challenge this evening the team from Balliol failed to identify the author of “Murder in Samarkand”. Craig needs to educate the latest student generation.

Courtenay,
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Agreed, bankers apparently made loans to Greece, either without due diligence or in the belief that they were dubious loans but that they were backstopped by German taxpayers.
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So why should Greece not default? That, I thought was Papandreou’s idea at the time of the proposed referendum. A big default is needed to return the banking industry to the discipline of an unfettered free market.

So you want the banking industry to be returned to the discipline of an unfettered free market – but when it comes to labour you are totally against free markets. Please make you mind up – some of us just don’t belive in totally free markets for anything – and believe that there is a balance to be struck as in most things.

Up to a point I thought that we were sharing ideas from the same page, reading in a similar rational way, if not quite fully the same script – but, with that comment, I must put distance between where your mind is and where mine is.

There is not and never has been any totally unfettered market. What happened at the time of the Great Depression is seeing its mirror image reflected in current times in greed combined with significant corruption. Following the Great Depression, the Americans introduced the Glass-Steagall Act – which was designed to keep sections of the banking industry distinct and reasonably accountable and regulated. For a while it worked, then we get to further movement away from the gold standard, repeal of Glass-Steagall, removal of regulation Q, and greed is at it again and we now find ourselves in the mess that presently exists. Put those thoughts on the shelf for a minute.

Goldman Sachs sold the Greek government worthless shit derivatives. The rating agencies had been paid by Goldman Sachs and Merrill Lynch – thus Triple A ratings were given, when, truth be told – shit was being certified as substance. With market collapse the same Goldman Sachs crooks send in auditors for “assistance to the Greek government” ( so – originally when I implied a swindle and you disagreed with me, my mind was perfectly clear about what had transpired). Thus, the books had to be cooked. Now send for the EU who figured out the scam. Now play the politics. Why hasn’t legal action been taken against Goldman Sachs? – simple politically Obama says to the EU – fuck off – leave ‘em alone. Try to follow the legal trail but it fades away, with “political dust and powder” sprinkled to hide the truth from public eyes and just scrutiny. Call it – cover up; civil settlement; avoidance of criminal charges against Goldman Sachs – but all fundamentally corrupt at the core.

The whole thing sticks to high heaven. Meanwhile the Greeks get fucked.

Note now, with zero US interest rates, the banks get free money. And, they cut interest on deposits, but still have the use of the money.

Again, in the banking sector, simply borrow free money, then lend back to governments and consider the levels of profits the banking sector is presently actualising.

Put all the foregoing together and get back now to the Greek political situation.They are not stupid – they know that their politicians in collusion with the “banksters” fucked ‘em – but what do they do? Well, they don’t make the laws, the politicians do. All they can do is what they are doing – and it becomes a choice between riot, revolution or continued impoverishment. But, Canspeccy – educate us on this “unfettered free market” when it is definitely that lack of regulate that caused the problem in the first place. Goldman Sachs, junk sold, books cooked, and then?

Having swindled the system, the same banking sector stands to reap considerable rewards from the interest payments that the Greek government has to pay for the bailout money, but the Greek people need not hold their breath that an iota of the several millions will in any way be there but to keep the ponzi scheme going , and they dare not expect any prospects of an economic solution or any likely chance for economic recovery.

One and Only
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“So you want the banking industry to be returned to the discipline of an unfettered free market – but when it comes to labour you are totally against free markets. ”
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Bollocks. If you’re for bailouts for stupid bankers who buy crap bonds, fine with me as long as my government’s not involved.
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And when did I say I was totally against free labour markets? Never, obviously, since you cannot quote me on it.
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What I said was that if you insist on the globalist agenda, and Craig Murray is a globalist, made welcome at Global Empire HQ, Chatham House, then the only way to solve the unemployment problem is (a) full wage convergence with the third world, or (b) a wage subsidy program. But the subsidy program I have outline elsewhere is market based. Employers would have to pay at least minimum wages, but they could bid in an auction for wage subsidies. But probably too complicated for you to understand.
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But I do realize that understanding anything is too much trouble for the weird crew here.

Courtenay,
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Try not to sound like total prick. If your as rational as you claim, why is it that it hardly shows.
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Do you want to bail out the bankers or not? If not then you are agreeing that the full unfettered free market in bonds should be allowed to work.
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Sure Goldman Sachs may have mugged the Greeks in some way but that is a side issue. The Greek government irresponsibly borrowed far more than it could repay. This was out and out corruption — vote buying on a huge scale.
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The scam ended with the election of the Papandreou government because Papandreou was not prepared to take the blame for the fiscal irresponsibility of his predecessors.
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The scam was probably aided by bankers lending money they knew the Greek government would have difficulty repaying. But then again the banks may simply not have done adequate due diligence.
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Either way, a Greek default would have provided some well-deserved punishment for the moral and business laxness of the banking industry. But you’re against that, apparently. Why?

@ Canspeecy,
Three points that you raise:-
1. Do you want to bail out the bankers or not? If not then you are agreeing that the full unfettered free market in bonds should be allowed to work.

There is no desire, on my part for any bailout of the bankers. If you read what I posted, you would have seen that far from that I was pointing out the corruption of the “Banksters” and the depths to which said corrupt ran. So – how with a rational mind could I have been seen to be going down a path of reason that equates in any way to:-

“If not then you are agreeing that the full unfettered free market in bonds should be allowed to work.”

Read Adam Smith very carefully and I guarantee that with a rational mind applied you will come to appreciate why the “free market” and even more so an “unfettered free market” ( as you term it) is a misconception. There was corruption afoot in the Greek situation ( and I believe that we are agreed on that?).

2. Sure Goldman Sachs may have mugged the Greeks in some way but that is a side issue. The Greek government irresponsibly borrowed far more than it could repay. This was out and out corruption — vote buying on a huge scale.

In any process of corruption there are two parties – the “corrupter” and the “corruptee”. So, I really and honestly do not think that either side of the process is a mere “side issue”, since both are symbiotically related. You seek to apportion the blame on to the elected Greek representatives – and that is one side. Yet, the Goldman Sachs flip side is the other very important element, and I did speak to that in my post and stand by what I said.

3. Either way, a Greek default would have provided some well-deserved punishment for the moral and business laxness of the banking industry. But you’re against that, apparently. Why?

Let there be a default. Find and post my words where I am indicating that the Greeks are not entitled to go all the way ( if that is their choice) when I have used words such as “riot” and “revolution”. Please point it out to me. The post I put up, if you read carefully, was actually pointing out the US legal dodge when it came to accountability for what Goldman Sachs had done. So, why do you for a moment think that I would not from a legal perspective support, as you put it in your own words:-
“…well-deserved punishment for the moral and business laxness of the banking industry”?

At the end of it, you have a polite, non ad hominem propelled reply from me.
Respectfully,
Courtenay

AJ
Are you dyslexic?
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I quoted Friedman as saying “we are all Keynsians now”.
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What he meant is open to debate. Here’s one commentary:
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one can make the claim that Friedman is a Keynesian and remain in good scholarly company. Both Don Patinkin (Gordon, 1974) and Harry Johnson (1971) see Friedman’s monetary theory as an extension of the ideas commonly associated with Keynes.